Despite the Mataura Valley Milk (MVM) contribution, The a2 Milk Company's (NZE:ATM, ASX:A2M) revenue upgrade for fiscal 2025 is "modest" given challenging conditions in China, Jarden Research said in a Nov.25 note.

The Company upgraded its fiscal 2025 year-on-year revenue growth guidance to "mid to high single-digit revenue growth" from "mid-single-digit growth.

The dairy nutritional company expects earnings before interest, taxes, depreciation, and amortization (EBITDA) margin for the period to be broadly in line with the prior year.

The a2 Milk Company said its upgrade was due to a "significant increase" in MVM external ingredient sales compared to the previous year due to higher Global dairy trade prices.

Jarden believes that this upgrade is modest and "low quality" despite MVM's contribution due to the declining rate of newborns in China which is tracking below the company's expectations presented in their 2021 strategy day.

Jarden notes that this places additional pressure on China's infant milk formula market which will affect players in the industry.

"This is clearly a headwind for all industry players with A2 Milk part insulated by strong A2 category growth and its premium positioning over the near term," Jarden said.

The investment firm maintained the company's overweight rating but raised its target price to NZ$7.35 from NZ$7.25.