MWI Veterinary Banks on Fundamentals, IVESCO Integration - Analyst Blog

On Aug 13, 2014, we issued an updated research report on MWI Veterinary Supply Inc. ( MWIV ) - a leading distributor of animal health products to veterinarians across the U.S. and U.K. The company reported a better-than-expected fiscal third quarter with revenue and EPS beats over the Zacks Consensus Estimate. Moreover, the quarter's performance reflected a solid improvement over the prior-year period's numbers. The stock currently carries a Zacks Rank #3 (Hold).

MWI Vet recorded earnings per share of $1.52 in the third quarter of fiscal 2014, up 15.2% year over year and ahead of the Zacks Consensus Estimate by 1.3%. Revenues surged 28.4% to $778.4 million, exceeding the Zacks Consensus Estimate of $762 million. The company posted healthy growth in the quarter on strong 30.4% growth in U.S. revenues which was benefited from the acquisition of IVESCO and organic revenue growth.

Both the companion animal and production animal growth rates (excluding all feed additives) were in low double digits. In addition, growth in flea, tick and heartworm products, increased sales of diagnostic lines and pharmacy fulfillment business contributed to the growth domestically in the reported quarter. In light of the strong growth trends, the company increased its revenue outlook for fiscal 2014. Also, EPS forecast has been narrowed favorably.

Currently, the company is focusing on successful integration of IVESCO including retaining customers and sales during this transition. With this acquisition, the company is in a position to offer an enhanced product portfolio with improved supply chain performance to its vendors and customers. IVESCO's complimentary strength in the production animal market positioned the company to help meet the increasing global demand for protein.

However, despite these positive developments, MWI Vet's Micro business was impacted by the recall of a number of beta-agonist products in Sep 2013 which was replaced by a more competitive product at half of the suspended product's price. We also remain watchful of the company's dependence on vendors to boost sales. MWI Vet faces challenging conditions in end-markets as well, which might affect its growth trajectory going forward. Moreover, the tough competitive landscape and macroeconomic uncertainty keep us on the sidelines.

Other Stocks to Consider

Better-ranked medical devices stocks that are worth a look include McKesson Corporation ( MCK ), Hologic Inc. ( HOLX ) and Edwards Lifesciences Corp. ( EW ), all carrying a Zacks Rank #2 (Buy).

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MWI VET SUPPLY (MWIV): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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