The The a2 Milk Company Limited (NZSE:ATM) Full-Year Results Are Out And Analysts Have Published New Forecasts

Explore a2 Milk's Fair Values from the Community and select yours

It's been a pretty great week for The a2 Milk Company Limited (NZSE:ATM) shareholders, with its shares surging 11% to NZ$9.35 in the week since its latest annual results. Results were roughly in line with estimates, with revenues of NZ$1.9b and statutory earnings per share of NZ$0.28. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Following last week's earnings report, a2 Milk's 14 analysts are forecasting 2026 revenues to be NZ$1.93b, approximately in line with the last 12 months. Statutory earnings per share are expected to decline 18% to NZ$0.23 in the same period. Before this earnings report, the analysts had been forecasting revenues of NZ$2.03b and earnings per share (EPS) of NZ$0.31 in 2026. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

See our latest analysis for a2 Milk

The analysts made no major changes to their price target of NZ$8.86, suggesting the downgrades are not expected to have a long-term impact on a2 Milk's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on a2 Milk, with the most bullish analyst valuing it at NZ$10.00 and the most bearish at NZ$7.80 per share. This is a very narrow spread of estimates, implying either that a2 Milk is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that a2 Milk's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 1.8% growth on an annualised basis. This is compared to a historical growth rate of 4.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.2% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than a2 Milk.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for a2 Milk going out to 2028, and you can see them free on our platform here.

We also provide an overview of the a2 Milk Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.