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Phibro Animal Solid on Global Prospects, Currency Woes Ail

Zacks Equity Research

On Mar 18, we issued an updated research report on Phibro Animal Health Corporation PAHC. Phibro Animal’s existing operations and established sales, marketing and distribution network in more than 65 countries, provide it ample scope to take advantage of global growth opportunities. However, adverse currency movements remain a major concern for this Zacks Rank #3 (Hold) company.

This leading global diversified animal health and mineral nutrition company has been outperforming its industry for the past month. The stock has gained 6.3% in comparison with the industry’s 1.9% rise.

Outside the United States, Phibro Animal’s global footprint extends to key high-growth regions (countries where the livestock production growth rate is expected to be higher than the average growth rate), including Brazil and other countries in South America, China, India and Asia Pacific, Russia and former CIS countries, Mexico, Turkey, Australia, Canada and South Africa and other countries in Africa.

Phibro Animal has continued to invest in the Far East Asia where substantial growth is expected in poultry and dairy industries. Currently, the company is expanding its dairy business in the markets of Australia, Brazil and Mexico.


We believe given the turmoil prevailing in the economies of Russia, Greece, Brazil and China, Phibro Animal has performed quite well, of late, and bears the potential to continue the healthy performance in the days ahead. Earlier, the company had expressed its plans to start selling in China soon.

We are also upbeat about Phibro Animal finalizing the purchase of MJ Biologic’s swine vaccines in the United States. Earlier, Phibro Animal had become the exclusive distributor of MJ Biologicals that works on research and development of animal health products. This represents Phirbo Animal’s entry into the swine vaccine market.

Meanwhile, Phibro Animal conducts operations globally, which entails transactions in a variety of currencies. Although a portion of the company’s revenues are denominated in various currencies, the selling prices of majority of its products outside the United States are referenced in U.S. dollars.

As a result, Phibro Animal’s revenues are not significantly directly affected by currency movements. However, the company is subject to currency risk to the extent that its costs are denominated in currencies other than those in which it earns revenues. Also, a persistently weak dairy industry within the Animal Heath arm is disappointing.

Key Picks

Some better-ranked stocks in the broader medical space are Integer Holdings Corp. ITGR, Veeva Systems Inc. VEEV and Hologic, Inc. HOLX.

Integer Holdings projects earnings growth rate of 31.2% for the first quarter. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Veeva Systems’ long-term earnings growth rate is projected at 14.8%. The stock currently carries a Zacks Rank #2 (Buy).

Hologic’s long-term earnings growth rate is estimated at 8.9%. The stock presently has a Zacks Rank #2.

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