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AptarGroup (ATR) Hits 52-Week High: What's Driving the Rally?

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Zacks Equity Research
·4 min read
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Shares of AptarGroup, Inc. ATR scaled a fresh 52-week high of $129.12 on Nov 23, before retracting to close at $127.81. Forecast-topping third-quarter 2020 results and strong demand for pharmaceutical products, sanitizers liquid soaps and disinfectants featuring the company’s solutions amid the COVID-19 pandemic are driving the rally. Anticipated benefits from its business-transformation plan, acquisitions and innovative product launches have also been contributing to the upside.

The company has a market capitalization of $8.2 billion.  Average volume of shares traded over the last three months is approximately 196.7K. AptarGroup has an expected long-term earnings per share growth rate of 7%. The company has a trailing four-quarter earnings surprise of 10.9%, on average.

AptarGroup’s current-year earnings estimates have been revised upward by 8% to $3.62 per share over the past 60 days. The same for 2021 has moved north by 6% to $4.11 per share.

Share Price Performance

The stock has gained 9.7% year to date, compared with the industry’s growth of 9.9%.

Driving Factors

Stellar Q3 Results: AptarGroup’s adjusted earnings per share (EPS) in the quarter was $1.00 cents, up 3% year over year. Total revenues improved 8% year over year to $759 million. Both the top and bottom lines beat the Zacks Consensus Estimate.

Upbeat Q4 Guidance: AptarGroup projects adjusted earnings per share for fourth-quarter 2020 between 84 cents and 92 cents. The mid-point of the guided range reflects year-over-year growth of 10%.

Strong Demand Amid the Pandemic:  Amid the pandemic, AptarGroup’s Beauty + Home segment will continue to benefit from high sales in the personal care market related to hand sanitizers and liquid soaps, and increased sales to the home care market primarily related to cleaners and disinfectants. The Pharma segment has also been witnessing growth so far this year driven by demand for existing medicines amid the pandemic. These include influenza vaccines, and allergy and asthma treatments, which are administered utilizing the company’s drug delivery devices and components for injection systems.

Benefits from Transformation Plan & Cost Reduction: AptarGroup is focused on strengthening its business-transformation plan in a bid to drive top-line growth, boost operational excellence, enhance approach to innovation and improve organizational effectiveness. The company’s ongoing cost control measures, which include reduction of temporary labor headcount, furloughs, wage cuts and cutting down discretionary spending, will also help sustain margins.

Preferred Choice for Different Brands: AptarGroup’s products that include dispensing pumps, closures and aerosol valves continue to be the choice for innovative product launches across the world. In the Pharma segment, AdhereIT — the connected intuitive and user-friendly onboarding solution for patients with chronic conditions who use auto injectors to self-administer medications at home — has been launched.

Also, The Procter & Gamble Company PG recently launched Vicks Sinex Severe Ultra Fine Mist in the United States featuring AptarGroup’s Bag-on-Valve system and actuator. Also, in the Beauty + Home segment, AptarGroup’s pumps and closures continue to be the preferred choice across sanitizing and cleansing products globally. Also, Unilever launched an antibacterial spray in Mexico, featuring the company’s spray pump and an antibacterial hand soap featuring closure.

Acquisitions are Key to Growth: AptarGroup remains committed to business expansion through acquisitions to expand the scope of technologies, geographic presence and product offerings. Notable buyouts include Fusion Packaging, Nanopharm, Gateway Analytical, CSP Technologies and Noble International.

Zacks Rank & Stocks to Consider

AptarGroup currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include AGCO Corporation AGCO and Crown Holdings, Inc. CCK. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an estimated earnings growth rate of 15.4% for the ongoing year. The company’s shares have gained 22% year to date.

Crown Holdings has a projected earnings growth rate of 11.7% for 2020. The company’s shares have appreciated 32% so far this year.

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