Why is the A2 Milk (ASX:A2M) share price up 5% on Thursday?

Why are A2 Milk shares up 5% today?

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The A2 Milk Company Ltd (ASX: A2M) share price is on fire today. A2 shares are currently up 4.87% at the time of writing to $6.25 a share. This move comes after A2’s nasty falls this week.

Since Monday morning, A2 shares were down more than 13% as of yesterday morning. Even after today’s rise, A2 Milk shares are still down more than 7% since Monday morning.

Before this week though, A2 shares looked as though they were riding an enthusiastic recovery after sinking as low as $5.04 back in May. In fact, between 18 May and 19 July, this company had risen about 40% from those lows.

So what’s going on with A2 Milk today?

A2 Milk share price stages recovery

Well, it’s not entirely clear what has sparked this dramatic recovery in the A2 share price this morning. The S&P/ASX 200 Index (ASX: XJO) is up today, but by 0.47% to 7,414 points at the time of writing. Probably not enough to spark a rally of this size in A2 shares on its own.

One possible catalyst could be a market announcement A2 released just after the close of trading yesterday. This announcement outlined some large purchases (as well as some sales) of A2 shares by a series of institutional investors.

These included Commonwealth Bank of Australia (ASX: CBA) and Colonial First State, as well as Citibank Hong Kong, Avanteous InvestmentsNorthern Trust Company and bank/broker UBS. It seems that in these cases, CBA was acting on behalf of the other entities.

The total number of all of these owners’ in A2 Milk shares amounts to 5.02% of all A2 Milk shares outstanding, so there is market-moving potential with this announcement.

Where to next for A2 Milk?

One broker who thinks there is a little milk left in the tank for A2, even after today’s rise, is investment bank Goldman Sachs. Goldman currently has a ‘neutral’ rating on A2 Milk shares, with a 12-month share price target of $6.96. That implies a potential upside of just over 11% on today’s pricing.

However, not all brokers are quite as bullish. As my Fool colleague Tristan reported earlier this week, brokers Citi and Credit Suisse both have ‘sell’ ratings on A2 shares presently, with share price targets of $6.05 and $5.50 a share respectively.

There’s no doubt as to which broker shareholders would prefer is right here!

At the current A2 Milk Company share price, the company has a market capitalisation of $4.43 billion.

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Motley Fool contributor Sebastian Bowen owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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