Synutra shares up after China probe finds no milk contamination

BANGALORE (Reuters) - Shares of Chinese baby-formula maker Synutra International (SYUT.O) rose as much as 32 percent Monday, a day after the country's health ministry said it found no link between the company's infant milk powder and premature sexual development in babies.

Shares of the company, which lost 35 percent last Monday on media reports of high hormone content causing premature breast development in baby girls, gained $3.97 to hit a high of $16.25, after the ministry said on Sunday it found no evidence of contamination in milk powder.

Following a probe into 20 milk powder brands including Synutra's, the Chinese health ministry said there was no evidence of high estrogen content in any of the samples.

However, analyst Katherine Lu of Oppenheimer & Co lowered her price target on Synutra shares to $19.50 from $27, and said rebuilding consumer confidence will remain an uphill battle for the company. The analyst expects substantial sales disruption for the company in the near term.

Analyst Howard Zhou of Roth Capital Research said in a note to clients that the incident may present a growth opportunity for Synutra if the company could take advantage of high consumer awareness in a positive way.

The analyst expects this negativity around Synutra to subside and maintained his price target at $20.00 on the stock.

Synutra shares, which touched a high of 16.25 in morning trade Monday, were trading up 20 percent at $14.78 on Nasdaq.

(Reporting by Vaishnavi Bala in Bangalore; Editing by Vyas MOhan)