The Bubs Australia Ltd (ASX: BUB) share price has shot higher recently thanks to progress in the US.
Bubs is rapidly growing and just told the market that it’s expecting even more sales revenue than before.
Bubs upgraded guidance
The infant formula ASX share said today that it expects FY22 gross revenue to exceed $100 million and to achieve at least a 100% increase on the FY22 first half underlying EBITDA (EBITDA explained).
When Bubs reported its FY22 half-year result, where it reported $38.5 million of gross revenue and $1.2 million of underlying EBITDA, it said at the time that it expected to deliver modest half-on-half growth of revenue and underlying EBITDA.
The Bubs CEO and founder Mrs Carr said all key product segments are performing strongly in Australia, China and the USA. Mrs Carr commented:
Due to a strong momentum in China and the unanticipated volume of sales in the USA, complemented by Bubs’ demonstrated agility and speed to respond to the call for action with first mover advantage, fourth quarter turnover is likely to be higher than originally anticipated.
It has been an extraordinary journey for Bub to have had over 12 months of in-market experience to provide the first response to USA’s infant formula shortage, which is likely to change the industry landscape in the USA. This has significantly accelerated our entry to one of the largest infant formula markets in the world, and we look forward to introducing more American families to Bubs’ full range of products.
US expansion
Bubs is involved with trying to help with the US infant formula shortage. The US administration is working with Bubs to get 1.25 million tins to the country. Those tins are even being flown on specially-sourced flights of Department of Defense contracted commercial aircraft.
The latest step has been for the business to get those tins to retailers. The retailers Kroger, Albertsons and Walmart will be putting Bubs tins on the shelves on a total of around 4,800 stores in the US in the coming days and weeks. Bubs products were already being sold on Walmart.com.
Final thoughts
The Bubs share price has gone up more than 40% over the last month. It will be interesting to see whether this is a one-off boost for Bubs sales or whether it can cement its place in the US infant formula market.
I think the progress that Bubs is making in Asia and now the US is promising. There are risks, and infant formula is certainly a volatile industry to say the least, but I think the Bubs share price small cap long-term opportunity.