Here's why the a2 share price is soaring today

It forecast H1 FY 2020 revenue should land between $780 million to $800 million. Over the half it expects direct China infant formula sales to grow to NZ$135 million.

| More on:
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 A2 Milk Company Ltd (ASX: A2M) share price is up 10.3% to $13.26 today after the a2-only-protein infant formula and supermarket milk forecast rising EBITDA margins over fiscal 2019. 

It now expects FY 2020 EBTIDA margin to land between 29%-30% as gross margins should be higher-than-previously-expected on the back of rising product prices and cheaper inputs into the cost of goods sold. 

It also forecast H1 FY 2020 revenue should land between $780 million to $800 million. Over the half it expects direct China infant formula sales to grow to NZ$135 million, or around a whopping 84% over the prior corresponding sale. Cross border e-ecommerce sales into China are expected to grow 54% to NZ$155 million. 

Sales in the U.S. market more than doubled to NZ$27 million.

a2 has only made small inroads into this potentially large market so far with its success in North America or otherwise likely to have a large bearing on the medium-term share price. 

As at June 2019 it had no debt and NZ$419 million cash on hand. It also boasts a high return on equity and is growing quickly. There's a lot to like about a2 in my view. 

Motley Fool contributor Tom Richardson owns shares of A2 Milk.

You can find Tom on Twitter @tommyr345

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 Market News

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 »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

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 »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

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 boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »