Dow Jones Newswires: Bubs Australia shares surge on U.S. deal to aid infant-formula shortage

SYDNEY–Bubs Australia Ltd. shares soared after it secured a deal to send at least 1.25 million tins of infant formula to the U.S.

Shares in the infant-formula company
BUB,
+41.24%
were 44% higher at 0.70 Australian cents (50 U.S. cents) in afternoon trade after earlier hitting a high of A$0.86.

Bubs Australia said Monday that it has 500,000 tins of infant formula ready for immediate export to the U.S. after the Food and Drug Administration provided discretion for their sale amid widespread shortages nationally.

The company said this supply is part of a commitment to provide at least 1.25 million tins of infant formula to the U.S. that encompasses all six of its brands, including A2 Beta-Casein Protein and Bubs Organic.

Analysts from Citi said that this should lead to material short-term earnings upside, with estimates amounting to 13% and 39% upside potential to its fiscal 2022 and 2023 sales forecasts for Bubs Australia.

Recent research conducted by Citi found that Bubs Australia is likely better positioned than peer a2 Milk Co. to capitalize on the current infant-formula supply shortage, given Bubs Australia’s existing relationship with the FDA. A2 Milk shares were recently 10.0% higher at A$4.77.

Bubs Australia shares have more than doubled from a year earlier.

Write to Alice Uribe at alice.uribe@wsj.com