Why the Bellamy's share price surged 9% higher today

The Bellamy's Australia Ltd (ASX:BAL) share price has been an impressive performer on Monday. Here's why its shares have surged higher…

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Bellamy's Australia Ltd (ASX: BAL) share price has had a very positive start to the week.

In morning trade the baby food and infant formula company's shares are up over 9% to $9.64.

This latest gain means that Bellamy's shares have now rallied 18% since this time last week.

Why is the Bellamy's share price surging higher?

Although Bellamy's shares initially sank notably lower following the release of its half year results, it didn't take long for them to recover and then push even higher.

Investors appear to have overlooked the bitterly disappointing financial result and focused more on its plans for the future.

As many readers will be aware, Bellamy's has been waiting for the SAMR accreditation required to sell its products in mainland China since the end of 2017. This delay has been a major disappointment and means the company has been unable to benefit fully from the growing demand for infant formula in the country like rival A2 Milk Company Ltd (ASX: A2M).

Pleasingly, in its results last week management revealed that it has high confidence in a successful SAMR registration. It expects Australian SAMR audits to take place this year and is ready to activate its China Offline strategy the moment it is granted.

This strategy includes taking control of sub-distributor relationships and optimising network, taking control of key accounts, pricing and trade marketing, prioritising geographies, and the establishment of north, south, east and west sales units.

In addition to this, in March the company will launch its high impact campaign which will be supported by A-grade ambassadors and key opinion leaders. This includes Stefanie Sun, Zilin Zhang, and Niangao Mama who have a combined following of over 55 million on Chinese social media platforms.

Another potential catalyst for the share price rise was a broker note out of Citi last week which revealed that its analysts have a buy rating and $9.75 price target on Bellamy's shares.

According to the note, the broker has pointed to Bellamy's significant brand awareness in China as a reason to be positive on the future. It expects the China market to underpin strong sales growth once it receives its SAMR accreditation.

Should you invest?

I think that Bellamy's would be a good long term investment even after its stellar share price rally over the last five trading sessions. I would suggest investors consider it ahead of its smaller rival Bubs Australia Ltd (ASX: BUB), which has also risen strongly today.

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.

More on Share Gainers

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »