Why is the Bubs share price taking off today?

Bubs shares are starting the week on a positive note.

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Key points

  • Bubs shares accelerate 4.03% to 64.5 cents after the company provided a positive update to the ASX 
  • Management highlighted it entered into supply agreements with two new United States-based supermarket chains 
  • In addition, after a number of discussions, Bubs infant formula products will receive the benefit of tariff concessions under the AUSFTA Agreement 

The Bubs Australia Ltd (ASX: BUB) share price is edging higher today following a market update from the company.

At the time of writing, the infant formula company’s shares are fetching at 64.5 cents apiece, up 4.03%.

Let’s take a look at what management provided to the ASX this morning.

What did Bubs announce?

In its update released to the ASX, Bubs advised it entered into supply agreements with two new retail groups.

This comes ahead of the fourth plane delivery to the United States scheduled on 6 July under the Operation Fly Formula. Management noted that all 90,000 baby formula tins onboard worth $3 million in gross revenue have been presold.

The supply agreements are with a supermarket chain based in Texas, H-E-B Grocery Company, and American supercentre chain, Meijer.

Furthermore, 22 state agencies in the US have authorised Bubs Infant Formula products as suitable under the WIC program.

The WIC program is a special subsidy supplement nutrition program from the United States Government for women, infants and children.

Evidently, this opens the door for Bubs products to hit more retailers across the country.

On another note, management noted that Bubs infant formula products will receive the benefit of tariff concessions under the AUSFTA Agreement.

This comes after the United States and Australian Government held discissions surrounding the correct tariff classification of Bubs Infant Formula products.

Bubs founder and CEO, Kristy Carr commented:

We are grateful for the opportunity to assist parents under the WIC Program. As Bubs continues to replenish retailer shelves with up to six Bubs Infant Formula products, it is comforting that many more American parents will have the opportunity to access our clean nutrition that is and will continue to be available on shelves.

We are thankful to the U.S. and Australian Government for their assistance in helping us understand our tariff obligations. It is great to see that the strong trade relations and reciprocal recognition of food standards between the two countries have reflected in greater market access for our category, particularly during this time of crisis for American families.

Bubs share price summary

Despite a difficult 12 months amid COVID-led channel disruptions, the Bubs share price has gained 40% over the period.

The company’s shares touched a 52-week high of 86 cents on the back of the supply agreement with the United States.

However, since then, its shares have retraced due to market volatility across the ASX which weighed down Bubs shares.

Based on valuation grounds, Bubs commands a market capitalisation of around $379.92 million.

Motley Fool contributor Aaron Teboneras 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 BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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