BGA made fresh 8-year lows in July totally ignoring the markets euphoric rally, the company delivered a profit downgrade to the tune of ~9% caused by rising Victorian milk prices, at MM we were surprised that anyone could have expected a different outcome, all they had to do was pop into Coles or Woolies! What’s particularly weighing on the stock is heavy downgrades for their 2023/24 earnings which by definition must come with some large assumptions around milk prices etc.
- We feel this $1bn dairy business isn’t cheap enough to justify the recessionary risks at play but value is looming on the horizon.
MM can see value in BGA around $3
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