The A2 Milk share price has had a tough week. Could this other ASX dairy company cash in?


It’s been a gloomy end to the trading week for the S&P/ASX 200 Index (ASX: XJO). The ASX 200 slid by 0.77% to close on Friday at 7,023.5 points.

The A2 Milk Company Ltd (ASX: A2M) share price had a slightly happier ending. After a bouncy trading day, the ASX 200 dairy company enjoyed a 0.4% finishing boost to close on Friday at $4.90 a share.

However, the past week overall has not been kind for A2 Milk shares. The company started the week at $5.06 a share. This means that A2 shares have gone backwards by more than 3% over this week.

Much of this negative sentiment appeared to flow on from the announcement the company made on Wednesday.

This informed investors that the US Food and Drug Administration (FDA) was “deferring further consideration for an enforcement discretion to import infant milk formula (IMF) products into the United States”. That includes A2 Milk, as well as any other aspirant.

The US is currently facing a severe shortage of baby formula products. Investors had hoped that A2 Milk would be granted FDA approval to ramp up baby formula exports to the country.

Its fellow dairy company Bubs Australia Ltd (ASX: BUB) made some progress in May. But Wednesday’s announcement made it clear that this wouldn’t be happening any time soon for A2 Milk.

So the A2 Milk share price seems to have lucked out in this regard. But the same can’t be said for another of A2 Milk’s competitors.

Australian Dairy Nutritionals Group (ASX: AHF) is a minnow compared to A2 Milk, with a market capitalisation of just under $40 million (compared with A2’s $3.62 billion at present).

But Australian Dairy has something A2 doesn’t. That would be an FDA application still under “active review”. According to an ASX release put out today, the company has stated the following:

Contrary to certain media articles which have suggested that all pending applications to the United States Food and Drug Administration (FDA) for accelerated approval to sell infant formula in the United States have been paused, the Board of Australian Dairy Nutritionals Group… is pleased to advise that the FDA has confirmed that AHF’s FDA application in relation to its future Gradulac Gentle infant formula range remains under active review.

We understand the FDA sent out a deferral letter to many applicants whose application will not be progressed at this time however AHF did not receive this letter and the FDA has confirmed our application is still under active review.

Like A2, Australian Dairy also produces A2 dairy products, in this case organically. So it is interesting to see Australian Dairy have its application to the FDA get an “active review”, where A2 Milk did not.

Whatever the reasons for this situation, it has certainly put a dampener on the A2 Milk share price’s trading week this week.

Source: Read More

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