The A2 Milk Company and Wesfarmers Placed on ASX Investor Watchlists

The Australian Securities Exchange (ASX) has witnessed contrasting movements for two of its most heavily watched listed entities, The A2 Milk Company Limited (ASX: A2M) and Wesfarmers Limited (ASX: WES). An investment analysis published on May 24, 2026, highlights both organisations as key candidates for investor watchlists, though they present fundamentally different market dynamics. While A2 Milk has faced severe operational headwinds that drove a 38.3% share price decline since early 2025, Wesfarmers is demonstrating robust recovery, sitting 21.5% below its 52-week high after rebounding from earlier year-to-date lows.

Supply Chain Disruptions and Recalls Suppress A2 Milk

The market performance of A2 Milk has been heavily impacted by near-term logistical and regulatory hurdles. The company’s share price recorded a 23.28% decline over the past year as of May 12, 2026, and a 20.96% fall in the single month leading up to that date, closing at AUD 6.36. The downward pressure intensified on May 20, 2026, when the stock fell 3.918% in a single trading session to reach AUD 5.640.

These declines stem from a material downgrade to A2 Milk's outlook. On April 13, 2026, the company issued a trading update that revised its FY26 expectations downward. This followed a brief period in February 2026 where the group had initially upgraded its earnings guidance. The April revision was prompted by significant supply chain disruptions affecting its China-label infant formula sales in Q4 FY26. Consequently, revenue growth expectations were moderated to low-to-mid double digits, and the revised EBITDA margin guidance was lowered to 14.0%–14.5%, down from the previous forecast of 15.5%–16.0%.

Compounding these supply chain issues, A2 Milk announced a voluntary recall of three batches of US-label infant formula on May 4, 2026, due to potential toxin contamination. This announcement caused an immediate market reaction, with the share price falling 13% on the day.

Despite these short-term operational challenges, the underlying financial foundation of A2 Milk remains a point of interest for long-term investors. In FY24, the company reported annual revenue of $1,673 million, achieving an 11.6% three-year compound annual revenue growth rate (CAGR) since 2021. Net profit also improved significantly, reaching $168 million in FY24 compared to $81 million in 2021. The firm generated a Return on Equity (ROE) of 12.8% in FY24. On May 14, 2026, A2 Milk traded at a Price-to-sales ratio of 3.65x, slightly above its five-year average of . Investors are monitoring the company closely as supply chain conditions are expected to normalise in .