BUBs Australia (BUB) – Excellent result, but CEO exits

Bubs Australia manufactures and sells various infant formula and nutrition products in Australia, China, the US and elsewhere. The company was incorporated in 1993 and is based in Dandenong South in Melbourne.

Bubs Australia has delivered a stronger than expected 4QFY25 result, which we interpret as signalling the end of what has been a very successful turnaround. Given the outstanding performance of the business during the 23-month tenure of CEO Reg Weine, it then came as a big surprise when the board decided to change captains abruptly at this juncture. With brand-new CEO Joe Coote, former CEO of Darigold, the fourth-largest dairy cooperative in the US, and CFO Naomi Verloop just five months into her tenure, the shuffle at the top introduces an element of uncertainty at a time when we were starting to gain confidence in the company’s outlook.

As a result, we have held off upgrading our forecasts pending further investigation. We also note that a change in senior management may have implications for the timing of the pending permanent access approval to the US market from the Food and Drug Authority (FDA).

We maintain our target price of $0.20 and our Buy recommendation but suggest some caution is warranted as we further examine the management changes and any potential changes in corporate strategy.

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