Goldman lifts its Blackmores target again -- to $220


Blackmores, the Australian vitamin and food supplement maker, briefly hit $200 a share last month, becoming Australia’s most expensive share.

Today the shares are trading at $185 each, up so far today about 3%.

A year ago the shares were at $32.31. The spectacular rise is being driven by strong demand from China for safe and reliable vitamins.

And Goldman Sachs analysts believe the share price still has a long way to go. Its rates Blackmores as a Buy and has just updated to its 12 month price target to $220 from $195.

“We believe Chinese demand through the cross-border channel will continue to deliver significant growth,” says Goldman Sachs in a note to clients.

Strong results are expected for the second and third quarters on strong demand during two important selling periods in China: Singles’ Day and Chinese New Year.

Goldman has increased its 2016 net profit forecast for Blackmores by 7.4% to $107.5 million.

And sales in China will soon overtake Australia, as this chart shows:

Currently Blackmores is getting a big benefit from a grey market where local Australian sales are ending up in China.

Selling more directly to China will deliver a better margin for Blackmores.

And there is major upside from Blackmore’s infant formula — another high demand product in China — joint venture with Bega Cheese.

A2 Milk Company has just upped its full year profit guidance on strong sales of its infant formula into China.

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