On Sep 14, we issued an updated research report on Phibro Animal Health Corporation (PAHC - Free Report) . This NJ-based company is a leading global diversified animal health and mineral nutrition company.
Over the last six months, Phibro has been trading above the broader industry. Currently, the stock has gained 28.5% compared to 9.4% of the broader industry. We are encouraged to note that outside the United States, Phibro’s has extended its reach to Brazil and other countries in South America, China, India and Asia Pacific, Russia and Africa. This we feel will help the company counter competition.
The company continues to invest in the Far East Asia where the poultry and dairy industries are expected to grow exponentially. Currently, the company is expanding its dairy business in the markets of Australia, Brazil and Mexico. We believe that despite the turmoil in the economies of Russia, Greece, Brazil and China, Phibro has performed quite well and has the potential to maintain its performance.
Meanwhile, Phibro ended the fiscal fourth quarter on a solid note with both net sales and adjusted earnings beating the Zacks Consensus Estimate. Also, the year-over-year increase in both the counts is encouraging.
Further, the company witnessed year-over-year improvement across all segments. We are also encouraged by the expansion in the gross and operating margin in the reported quarter. Moreover, on a full-year basis, adjusted earnings and net sales surpassed the Zacks Consensus Estimate as well with year-over-year increases in both. Meanwhile, the company has provided its fiscal 2018 guidance for net sales and adjusted earnings.
On the flip side, Phibro operates in highly competitive industries. With respect to its major products, it faces threat from a substantial number of global and regional players. Phibro’s competitive position is principally based on product registrations, customer service and support, breadth of product line, product quality, manufacturing technology, facility location, and product prices.
Furthermore, withdrawal of approval for Mecadox (carbadox) by the FDA continues is a concern. Additionally, Phibro conducts operations globally, which entails transactions in a variety of currencies. As a result, currency fluctuation is a major issue for the company.
Zacks Rank & Key Picks
Phibro carries a Zacks Rank #3 (Hold). A few better-ranked medical stocks in the medical sector are Edwards Lifesciences Corporation (EW - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and IDEXX carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19.9% in the last six months.
Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 40.7% in the last six months.
IDEXX has a long-term expected earnings growth rate of 19.8%. The stock has gained around 4.7% in the last six years.
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