Macquarie analysts predict a downside risk to earnings for dairy company Synlait Milk (ASX:SML), based on a medium-to-long term outlook on A2 milk volume.

Macquarie has cut the price target to A$1.25 from A$1.53, sustaining its ‘underperform’ rating.

This resulted in a 0.8% drop for Synlait at NZ$1.27.

In the previous week, a2 Milk Company announced it would be terminating Synlait’s exclusive production and supply rights for certain infant milk formula products.

The brokerage reduced the FY24 and FY25 EPS estimates by 40% and 24%, respectively.

Of five analysts, two recommend buying the stock, two suggest holding it, and one advises selling; their median price target stands at NZ$2.05 according to LSEG Data.

Synlait has seen a sharp decline of 63.7% year-to-date.

Synlait Milk (ASX:SML) is a New Zealand-based dairy company specializing in milk processing and distribution.