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Here's Why Investors Should Retain Phibro (PAHC) For Now
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Phibro Animal Health Corporation (PAHC - Free Report) has been gaining from its diverse product offerings. The company’s booming vaccine business seems promising. Its extensive operations across major high-growth regions worldwide buoy optimism. However, mounting expenses and tough competition do not bode well.
In the past year, the Zacks Rank #3 (Hold) stock has lost 24.4% against a 32.6% fall of the industry and a 12.9% plunge of the S&P 500.
The renowned global diversified animal health and mineral nutrition company has a market capitalization of $786.17 million. Its earnings for the third quarter of fiscal 2022 missed the Zacks Consensus Estimate by 8.3%.
The company’s expected earnings growth for the next year is estimated at 5.9%, compared with the industry’s growth expectation of 21.2%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Diversified Product Portfolio: Phibro’s key animal health products, including medicated feed additives and nutritional specialty products, facilitate enhancing animal nutrition. The company’s leading product franchise, Stafac/V-Max/Eskalin, is approved in more than 30 countries for use in poultry and swine. Its nutritional product offerings, such as OmniGen-AF, are used increasingly in the global dairy industry.
The company also manufactures vaccines protecting animals from viral and bacterial disease challenges. Recently, Phibro signed an agreement with Virbac to distribute their generic DRAXXIN in the Canadian market.
Potential in Emerging Markets: We are upbeat about Phibro’s existing operations and established sales, marketing and distribution network in over 75 countries. Outside the United States, the company’s global footprint extends to key high-growth regions where the livestock production growth rate is expected to be higher than the average growth rate. These regions include Brazil, China, India, Mexico, Turkey, Australia, Canada, South Africa, etc. The company has also continued to invest in Far East Asia, where huge growth is expected in the poultry and dairy industries.
Prospering Vaccine Business: In the fiscal third quarter, Phibro registered a 21% year-over-year improvement in vaccine net sales. The company’s vaccine business is witnessing higher domestic volumes and increased demand in Asia-Pacific. The acquisition of the assets of KoVax, an Israel-based vaccine developer and manufacturer, has strengthened Phibro’s aquaculture products portfolio. Another notable buyout of the company was that of MJ Biologic’s swine vaccines in the United States. Recently, the company introduced a new vaccine facility in Sligo, Ireland.
The company’s pHi-Tech vaccination device delivered impressive results during the initial trials. The device is now being trialed and sold in more than a dozen countries and increasingly being serviced remotely.
Downsides
Rising Costs: In the fiscal third quarter, Phibro’s recorded a 17.8% rise in the cost of goods sold. Meanwhile, selling, general and administrative expenses in the reported quarter were up 6.9% from the year-ago period. These escalating costs are weighing on the company’s bottom line.
Competitive Landscape: Phibro is subject to stiff rivalry from many global and regional competitors with respect to its major products. The company’s competitive position is based principally on its product registrations, customer service and support, breadth of product line, product quality, manufacturing technology, facility location, and product prices.
Other Challenges: In the fiscal third quarter, Phibro’s bottom line performance was impacted by COVID-related challenges with a key supplier and the ongoing conflict between Russia and Ukraine. These continued challenges are driving higher-than-anticipated inflation and can result in broader economic impacts and security concerns, adversely affecting the company’s business in the near future.
Estimate Trend
The Zacks Consensus Estimate for Phibro’s fiscal 2022 earnings is pegged at $1.36, representing a 7.1% rise from the year-ago reported number.
The Zacks Consensus Estimate for its fiscal 2022 revenues is pegged at $939.79 million, suggesting a 12.8% rise from the fiscal 2021 figure.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Merck & Co., Inc. (MRK - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 13.1% against the industry’s 34.8% fall.
Merck has a long-term earnings growth rate of 10.1%. The company surpassed earnings estimates in the trailing three quarters and missed in one, delivering a surprise of 13.4%, on average. It currently carries a Zacks Rank #2 (Buy).
Merck has outperformed its industry in the past year. MRK has gained 20.8% against the industry’s 14.4% growth.
Patterson Companies has an estimated long-term growth rate of 9.6%. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%. It currently flaunts a Zacks Rank #2.
Patterson Companies has outperformed its industry in the past year. PDCO has lost 0.3% compared with the industry’s 12.8% fall in the past year.
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Here's Why Investors Should Retain Phibro (PAHC) For Now
Phibro Animal Health Corporation (PAHC - Free Report) has been gaining from its diverse product offerings. The company’s booming vaccine business seems promising. Its extensive operations across major high-growth regions worldwide buoy optimism. However, mounting expenses and tough competition do not bode well.
In the past year, the Zacks Rank #3 (Hold) stock has lost 24.4% against a 32.6% fall of the industry and a 12.9% plunge of the S&P 500.
The renowned global diversified animal health and mineral nutrition company has a market capitalization of $786.17 million. Its earnings for the third quarter of fiscal 2022 missed the Zacks Consensus Estimate by 8.3%.
The company’s expected earnings growth for the next year is estimated at 5.9%, compared with the industry’s growth expectation of 21.2%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Diversified Product Portfolio: Phibro’s key animal health products, including medicated feed additives and nutritional specialty products, facilitate enhancing animal nutrition. The company’s leading product franchise, Stafac/V-Max/Eskalin, is approved in more than 30 countries for use in poultry and swine. Its nutritional product offerings, such as OmniGen-AF, are used increasingly in the global dairy industry.
The company also manufactures vaccines protecting animals from viral and bacterial disease challenges. Recently, Phibro signed an agreement with Virbac to distribute their generic DRAXXIN in the Canadian market.
Potential in Emerging Markets: We are upbeat about Phibro’s existing operations and established sales, marketing and distribution network in over 75 countries. Outside the United States, the company’s global footprint extends to key high-growth regions where the livestock production growth rate is expected to be higher than the average growth rate. These regions include Brazil, China, India, Mexico, Turkey, Australia, Canada, South Africa, etc. The company has also continued to invest in Far East Asia, where huge growth is expected in the poultry and dairy industries.
Prospering Vaccine Business: In the fiscal third quarter, Phibro registered a 21% year-over-year improvement in vaccine net sales. The company’s vaccine business is witnessing higher domestic volumes and increased demand in Asia-Pacific. The acquisition of the assets of KoVax, an Israel-based vaccine developer and manufacturer, has strengthened Phibro’s aquaculture products portfolio. Another notable buyout of the company was that of MJ Biologic’s swine vaccines in the United States. Recently, the company introduced a new vaccine facility in Sligo, Ireland.
The company’s pHi-Tech vaccination device delivered impressive results during the initial trials. The device is now being trialed and sold in more than a dozen countries and increasingly being serviced remotely.
Downsides
Rising Costs: In the fiscal third quarter, Phibro’s recorded a 17.8% rise in the cost of goods sold. Meanwhile, selling, general and administrative expenses in the reported quarter were up 6.9% from the year-ago period. These escalating costs are weighing on the company’s bottom line.
Competitive Landscape: Phibro is subject to stiff rivalry from many global and regional competitors with respect to its major products. The company’s competitive position is based principally on its product registrations, customer service and support, breadth of product line, product quality, manufacturing technology, facility location, and product prices.
Other Challenges: In the fiscal third quarter, Phibro’s bottom line performance was impacted by COVID-related challenges with a key supplier and the ongoing conflict between Russia and Ukraine. These continued challenges are driving higher-than-anticipated inflation and can result in broader economic impacts and security concerns, adversely affecting the company’s business in the near future.
Estimate Trend
The Zacks Consensus Estimate for Phibro’s fiscal 2022 earnings is pegged at $1.36, representing a 7.1% rise from the year-ago reported number.
The Zacks Consensus Estimate for its fiscal 2022 revenues is pegged at $939.79 million, suggesting a 12.8% rise from the fiscal 2021 figure.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Merck & Co., Inc. (MRK - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 13.1% against the industry’s 34.8% fall.
Merck has a long-term earnings growth rate of 10.1%. The company surpassed earnings estimates in the trailing three quarters and missed in one, delivering a surprise of 13.4%, on average. It currently carries a Zacks Rank #2 (Buy).
Merck has outperformed its industry in the past year. MRK has gained 20.8% against the industry’s 14.4% growth.
Patterson Companies has an estimated long-term growth rate of 9.6%. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%. It currently flaunts a Zacks Rank #2.
Patterson Companies has outperformed its industry in the past year. PDCO has lost 0.3% compared with the industry’s 12.8% fall in the past year.