Phibro Animal Health: Q4 Impresses, Currency Deters Growth
On Sep 14, 2015, we issued an updated research report on New Jersey-based Phibro Animal Health Corporation PAHC – a leading global diversified animal health and mineral nutrition company.
Phibro ended fiscal 2015 on an outstanding note, squarely beating the Zacks Consensus Estimate in the fourth quarter, with Animal Health as the key contributor. With significant potential in the global animal health market, we believe the company is poised for further growth in the international space.
However, the company is subject to currency volatility given that its costs are denominated in currencies other than those in which it earns revenues. During the fourth quarter of fiscal 2015, the company witnessed a decline in sales of its Medicated Feed Additives (MFA) and other category products as customers in the foreign markets reduced their investment, owing to fluctuating currency movements.
Moreover, significant customer consolidations are expected to consequently ramp up the product pricing pressures that Phibro’s business faces. This, in turn, will adversely affect the company’s revenue growth. Phibro also faces competition from generic alternatives of some of its products that may weigh on its future financial health and operational performance.
On a brighter note, Phibro successfully expanded its business in the emerging nations during the reported quarter. Impressively, despite the recent downturn observed in the Chinese economy, Phibro’s business therein was unhampered owing to strong customer loyalty for the company’s products in the country.
We believe given the turmoil that is currently prevailing in the economies of Russia, Greece, Brazil and China, Phibro has performed quite well of late and bears the potential to retain its strong performance, going ahead.
Further, we are optimistic about Phibro’s MJ Biologics deal which should enhance the company’s U.S. swine product portfolio.
Currently, the stock carries a Zacks Rank #4 (Sell).
Key Picks in the Sector
Better-ranked medical product stocks include ICU Medical, Inc. ICUI, NuVasive, Inc. NUVA and OraSure Technologies, Inc. OSUR. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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PHIBRO ANIMAL (PAHC): Free Stock Analysis Report
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