Phibro Animal Health Corporation’s PAHC sustained growth in the Animal Health business is backed by robust sales of vaccines and Medicated Feed Additives ("MFAs"). The company’s focus on advancing vaccine technologies, along with the new vaccine production unit, instills optimism. Strong sales growth outside the United States seems encouraging. Yet, adverse macroeconomic impacts are a concern for Phibro’s operations.
In the past year, this Zacks Rank #2 (Buy) stock has rallied 71.5% compared with the industry’s 19.5% growth and the S&P 500 composite's 25.7% increase.
The renowned animal health and mineral nutrition company has a market capitalization of $872 million. PAHC has an earnings yield of 21% compared with the industry’s 14.1%. In the last reported quarter, Phibro delivered an earnings surprise of 20.59%.
Let’s delve deeper.
Key Upsides of Phibro
Animal Health Business Growth Continues: With the rise in scarcity of natural resources, demand for efficient production of animal food such as poultry, swine and cattle has increased. Phibro’s key animal health products, including MFAs and nutritional specialty products, help enhance animal nutrition. The company also manufactures vaccines, which protect animals from both viral and bacterial diseases.
During the fiscal fourth quarter, Phibro entered into a Purchase and Sale Agreement with Zoetis to acquire Zoetis’ MFA product portfolio, certain water-soluble products and related assets.
The Animal Health business witnessed 8% sales growth year over year in the fiscal fourth quarter. The upside was driven by a robust 14% increase in vaccine net sales, due to poultry product introduction in Latin America and a rise in domestic demand. Phibro reported MFAs and Other net sales growth of 12% due to strong demand in both domestic and international regions.
Potential in Emerging Markets: Phibro’s existing operations and established sales, marketing and distribution network in more than 80 countries provide it with ample scope to take advantage of global growth opportunities. Outside the United States, its global footprint extends to key high-growth regions, including Brazil and other countries in South America, Southeast Asia, Eastern Europe and Africa.
At the end of fiscal 2024, the company’s operations in countries outside the United States contributed approximately 42.5% to its total revenues.
Prospering Vaccine Business: Phibro is focusing on new developments along with incremental registrations and growing volumes of existing vaccine technologies. The company also makes significant investments to expand vaccine manufacturing capacity at several locations.
The vaccine business witnessed a robust 21% improvement in fiscal 2024, driven by a strong uptake across various regions, especially in Latin America. It also benefited from growing domestic demand. The company launched new commercial vaccines and looks forward to bringing additional vaccines to the Americas.
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Key Downside of Phibro
Macroeconomic Concerns: In the current scenario, Phibro’s business could be severely impacted by economic sanctions, bans and broader military conflicts resulting from the ongoing armed conflict between Russia and Ukraine. Due to such unfavorable general economic conditions, its profitability could decline and negatively affect its overall financial performance.
In the fiscal fourth quarter, Phibro’s operating profit declined 21% while the operating margin contracted.
Estimate Trend of Phibro
The Zacks Consensus Estimate for Phibro’s fiscal 2025 earnings per share (EPS) has moved 0.7% north to $1.44 in the past 30 days.
The consensus estimate for fiscal 2025 revenues is pegged at $1.19 billion. This indicates a 17.1% rise from the year-ago number.
Other Key Picks
Other top-ranked stocks in the broader medical space are TransMedix Group TMDX, Intuitive Surgical ISRG and Boston Scientific BSX.
TransMedix Group’s earnings are expected to surge 255.8% in 2024. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 156.5% in the past year compared with the industry’s 17.5% growth.
TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical, sporting a Zacks Rank of 1 at present, has an estimated long-term earnings growth rate of 17.4% compared with the industry’s 13.7%. Shares of the company have risen 64.8% compared with the industry’s 17.6% growth over the past year.
ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 17.1% for 2024 compared with the industry’s 15.7%. In the past year, shares of BSX have risen 57.6% compared with the industry’s 19.5% growth.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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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.
