Here’s why the A2 Milk (ASX:A2M) share price is rising again today

Here’s what’s happening with the A2 Milk share price today…

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The A2 Milk Company Ltd (ASX: A2M) share price has continued its positive run on Tuesday despite the ASX 200 sinking lower.

In afternoon trade, the infant formula company’s shares are up over 1% to $6.07.

This means A2 Milk shares are now up over 13% since this time last week.

Why is the A2 Milk share price rising today?

The A2 Milk share price has been rising on Tuesday following the release of a mixed note out of Citi.

According to the note, the broker has retained its buy rating and $7.20 price target on the company’s shares.

Based on the current A2 Milk share price, this implies potential upside of almost 19% over the next 12 months.

What did the broker say?

The note reveals that Citi believes there could be more bad news looming for A2 Milk. The broker is basing this on the fact that the company has yet to announce its performance rights for its CEO. It feels if things were going better, this would have now been announced.

Citi feels more bad news could weigh heavily on the A2 Milk share price. However, it also suspects that further share price weakness would make the company vulnerable to a takeover in or around the $7.00 per share mark. This is based on comparable acquisition multiples.

And judging by the company’s share price performance today, it appears as though some investors are focusing more on the potential takeover approach instead of the suspected continued underperformance of the company.

What’s next?

Time will tell how A2 Milk is actually performing. However, the good news is that investors won’t need to wait overly long to find out. The company is scheduled to hold its annual general meeting in approximately seven weeks.

All eyes will certainly be on A2 Milk shares that day.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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