A2 Milk Company Ltd (ASX: A2M) is up nearly 2% to $10.75. The share price has returned over 220% in a year, and the forward price-earnings-ratio is 44x.
An earning’s update by the company implies an approximate 10% downgrade. Stronger gross margins and lower marketing costs had been previously predicted.
UBS has left its Neutral rating unchanged but has cut its FY18 forecasts by 10% due to:
- Lower revenue in FY18
- Gross margins remaining unchanged
- 2H18 higher marketing spend.
Further out UBS expects downgrades to be more moderate due to recent price increases in China, increased penetration of China, and ongong shift to higher margin products.
A robust medium term outlook for A2 Milk was reaffirmed by UBS’s recent China visit, which is already in the price.
Treasury Wine Estates Ltd (ASX: TWE) trading in the same sector, has been hit today by a media report that the company has caused a wine glut in China. The share price is down 6% at the time of writing.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Rosemary Steinfort has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Treasury Wine Estates Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.