Shares of A2 Milk Company Ltd (ASX: A2M) fell by 1.87% to AU$3.935 today amidst a challenging market environment, particularly due to reduced demand in China. Despite the recent downturn, the company remains optimistic about its financial outlook for FY24. In contrast, Bubs Australia Ltd (ASX: BUB) entered a trading halt at 16.5 cents per share as it prepares for a capital raise aimed at bolstering its U.S. market strategy.
The past year has been tough for both companies, with A2 Milk’s shares falling 41% and Bubs witnessing an even steeper decline of 45%. At A2 Milk’s Annual General Meeting (AGM), CEO David Bortolussi acknowledged the impact of COVID-19 and the decreasing Chinese demand on their performance but remained confident in the company’s strategy moving forward. Broker firm Citi has mirrored this confidence, upgrading A2 Milk’s rating to ‘Buy’ and setting an ambitious price target of AU$4.81 (USD1 = AUD1.5291) per share.
Bubs Australia is also facing its own set of challenges. CEO Reg Weine, during their AGM, recognized the company’s financial struggles but emphasized aggressive growth plans in the American market. Benefiting from enforcement discretion policies in the U.S., Bubs aims to double its revenue growth for FY24, building on a previous two-fold increase.
Both companies are navigating through their respective difficulties by focusing on strategic initiatives, particularly in the U.S., where they see significant growth opportunities. With A2 Milk retaining a positive outlook and Bubs gearing up for expansion through a capital raise, both are poised to leverage their unique positions in the international markets despite current adversities.
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