The A2 Milk Company Ltd (ASX: A2M) share price is having another positive session.
The infant formula company's shares have risen a further 2% to a new 52-week high of $6.22.
This latest gain means that its shares are now up an incredible 46% since the start of the year.
To put that gain into context, $20,000 invested in A2 Milk shares on 29 December would now be worth $29,200.
Why is the A2 Milk share price on fire?
Investors have been bidding the company's shares higher for a couple of reasons.
One of those was in January, when the company was given a boost from better than expected Chinese birth rate numbers. This bodes well for infant formula demand in the key market.
But the main driver of this gain was the release of its half-year results in February, which impressed the market.
As a reminder, A2 Milk reported a 3.7% lift in revenue to NZ$812.1 million thanks largely to strong growth in the China & Other Asia segment. Its revenue was up 16.5% over the prior corresponding period, which offset a 24.1% decrease in the ANZ segment. The latter was driven by a major change in its distribution strategy.
And with the company's gross margin increasing modestly despite higher input costs, A2 Milk's EBITDA increased by 5% to NZ$113.2 million.
But getting investors excited the most was arguably its outlook statement which accompanied its results. Management revealed that its revenue growth expectations for FY 2024 have improved since its prior outlook statement.
It now expects low to mid single-digit revenue growth for the year compared to just low single digit growth. It also expects its margins to be largely in line with what was recorded in FY 2023.
Ahead of expectations
All the above came in ahead of expectations, which helps explain the rise in the A2 Milk share price.
Commenting on the results, Bell Potter said:
Revenue of NZ$812m was up +4% YOY (vs. BPe NZ$774m). EBITDA of NZ$113.2m was up +5% YOY (vs BPe of NZ$110.2m). EBITDA ex-MVM was NZ$128.5m (vs. BPe of NZ$121.3m). Underlying NPAT of NZ$85.3m was up +16% YOY (vs. BPe of $82.5m).
Is it too late to invest?
As things stand, most brokers believe that the A2 Milk share price is fully valued now.
However, analysts at Ord Minnett still see scope for big returns. They currently have an accumulate rating and $7.40 price target. This implies potential upside of approximately 19%.
