Where next for the a2 Milk (ASX:A2M) share price?

The A2 Milk Company Ltd (ASX:A2M) share price has fallen heavily in 2021. Where are its shares going from here?

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The A2 Milk Company Ltd (ASX: A2M) share price is under pressure again on Monday.

At one stage today, the fresh milk and infant formula company’s shares were down 3.5% to $5.36.

When the a2 Milk share price hit that level, it was down a very disappointing 73% from its 52-week high.

Where next for the a2 Milk share price?

Given the sharp decline in the a2 Milk share price from its high, investors will no doubt be wondering where it is heading next.

However, unfortunately, opinion remains incredibly divided even after this sizeable decline.

The bears over at Credit Suisse believes the company’s shares could still fall further and have slapped a sell rating and $5.00 price target on them.

Citi and Macquarie also have sell ratings on its shares with price targets of $5.85 and $5.60, respectively.

Sitting on the fence is Morgan Stanley. Its analysts have an equal-weight rating and $7.10 price target. Though, with this price target implying potential upside of 32%, an upgrade to a buy rating may not be far away if its performance doesn’t deteriorate further.

The bulls

Despite its abject performance, which has led to four earnings guidance downgrades in FY 2021, there are a few brokers that have bullish views on the a2 Milk share price.

Morgans currently has an add rating and $6.65 price target and, last week, UBS put a buy rating and NZ$13.50 (A$12.50) price target on its shares. The latter rather optimistically implies that the a2 Milk share price could double over the next 12 months.

And finally, analysts at Bell Potter have a buy rating and $8.50 price target on the company’s shares.

What now?

Which broker’s recommendation ultimately proves accurate will entirely depend on the success of a2 Milk’s inventory rebalance and the review of its growth strategy and executional plans to respond to changes in the lucrative China market.

But given the company’s failure to turn around its performance numerous times in FY 2021, the near term remains very uncertain. This helps to explain why brokers have such mixed views on the company right now.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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