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Is it too late to buy Bellamy’s Australia Ltd (ASX:BAL) shares?

Last week the Bellamy’s Australia Ltd (ASX: BAL) share price was one of the worst performers on the local share market.

After opening the week at $15.65, the organic infant formula company’s shares fell over 20% to close the week at just $12.49. This decline means its shares had almost erased their entire year-to-date gains.

Unsurprisingly it didn’t take long for investors to seize on this share price weakness. On Tuesday the Bellamy’s share price surged a massive 10% to $13.52.

Is it too late to invest?

I don’t think it is. After all, the catalyst for the selloff was a broker note out of Goldman Sachs which cut the price target on Bellamy’s shares down from $25.70 to $21.00.

Even after yesterday’s strong gain, this price target implies potential upside of 55% for its shares over the next 12 months.

Furthermore, based on Goldman’s revised earnings per share forecast of 56 cents in FY 2019, Bellamy’s shares are changing hands at a respectable 24x forward earnings.

It has been some time since Bellamy’s and rival A2 Milk Company Ltd (ASX: A2M) have traded at this level, making it an opportunity not to be missed in my opinion.

But there are risks of course. The major one being its CFDA accreditation. While most agree that it is a case of when and not if Bellamy’s is granted approval to sell Chinese labelled products in the lucrative market, failure to be granted approval would be catastrophic to its growth prospects.

I remain confident that these delays are due to the added complexity of the company seeking approval for a reformulated product rather than its existing product and nothing untoward. As such I expect approval will come in the next few months, setting the company up for a bumper second-half to FY 2019.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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.

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