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Phirbo (PAHC) Nutritional Specialties Grow, Vaccine Sales Dip

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Phibro Animal Health Corporation’s PAHC 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 year to date. The stock has gained 54% compared with the industry’s 2.4% rise.

Phibro exited third-quarter fiscal 2021 with better-than-expected earnings. Solid growth in the Performance Products segment driven by strong demand for copper-based products drove top-line growth. Growth in the international market of dairy products amid the post-pandemic recovery is impressive. The year-over-year growth in the Mineral Nutrition arm is encouraging as well.

Phibro Animal Health Corporation Price

Phibro Animal Health Corporation Price
Phibro Animal Health Corporation Price

Phibro Animal Health Corporation price | Phibro Animal Health Corporation Quote

In the third quarter of fiscal 2021, Phibro registered growth in nutritional specialties driven by strong international growth in dairy products. Moreover, vaccine sales were primarily driven by growth in APAC and North America regions.

The company has provided financial guidance for fourth-quarter fiscal 2021, which indicates year-over-year revenue growth.

Currently, the company is focused on expanding its footprint in the poultry, swine and cattle industries, in both domestic and international markets. Phibro is working actively to expand the cattle markets in the United States, specifically in Mexico and Brazil, as well as in Canada, Australia and South Africa. Also, the company recently signed an agreement with Virbac to distribute their generic DRAXXIN in the Canadian market. Phibro is also looking to expand into the multi-billion dollar pet care industry to add another pillar to its business. In this regard, the company has licensed a unique derma care compound for the treatment of atopic dermatitis in dogs.

On the flip side, Phibro saw a decline in performance by Animal Health due to lower international demand as well as unfavorable timing of certain domestic customer orders in the fiscal third quarter. Also, lower sales of vaccines during the quarter due to challenging economic conditions in Eastern Europe raise concerns. Escalating operating costs and contraction of both margins are discouraging. Foreign exchange fluctuations and a stiff competitive landscape are other headwinds.

Key Picks

A few better-ranked stocks from the broader medical space are Envista Holdings Corporation NVST, Inogen, Inc INGN and IDEXX Laboratories, Inc. IDXX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Envista Holdings has an estimated long-term earnings growth rate of 26%.

Inogen has an estimated long-term earnings growth rate of 33%.

IDEXX Laboratories has a projected long-term earnings growth rate of 20%.

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