A2 Milk shares fall as Citi downgrades to 'neutral'
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The news: A2 Milk shares lowered in morning trade after Citi said it is "incrementally more cautious" on the dairy company's near term outlook and downgraded the stock to 'neutral'.
The numbers: Shares were down 4% to $7.31 at 11:30am AEST, having added 26% since the turn of the year.
Citi reduced its rating on A2 from 'buy' to 'neutral', retaining its target price of $8.20.
The context: Citi analyst Sam Teeger said "several datapoints" pose a risk to A2's near term outlook.
These include softening port data, and air freight continuing to run at elevated levels, suggesting some A2 products may be in short supply.
Teeger also noted a recent profit warning by China Feihe, the country's largest infant milk formula producer, due to factors including a reduction in channel inventory to manage product freshness and quality.
The source: Citi research
