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Phibro Animal Health (PAHC) Rides High on Solid Prospects

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On Jun 12, we issued an updated research report on NJ-based Phibro Animal Health Corporation (PAHC - Free Report) – a leading global diversified animal health and mineral nutrition company.

Over the last three months, Phibro’s has been trading above the Zacks categorized Medical - Products industry. Currently, the stock has gained 26.9% compared to 7.1% of the broader industry. We are encouraged by the company’s raised full-year earnings guidance. Phibro’s revenues also increased on a year-over-year basis in the last reported third quarter of 2017.

Per management, the company’s Animal Health segment continues to be the key contributing business. Phibro is a leading provider of Medicated Feed Additives (MFA) products which have the potential to capture a large share of the huge and growing global animal health market. Management believes that the company is well positioned in the fastest growing food segment of the animal health market with its diversified product portfolio.

Outside the U.S., Phibro’s global footprint extends to Brazil and other countries in South America, China, India and Asia Pacific, Russia and Africa. The company has continued to invest in the Far East Asia where the poultry and dairy industries are expected to grow exponentially. Currently, the company is expanding its dairy business in the markets of Australia, Brazil and Mexico. We believe that despite the turmoil in the economies of Russia, Greece, Brazil and China, Phibro has performed quite well and has the potential to maintain the healthy performance.

Meanwhile, the company is progressing well with its vaccine business. In the last reported first quarter of 2017, sales from vaccines increased 30%, principally on volume growth of the company’s products for poultry and swine industries. Earlier, Phibro had become the exclusive distributor of MJ Biologics, Inc. (MJB) that works on research and development of animal health products. This represents the company’s foray into the swine vaccine market. Both the firms are working on developing certain animal vaccines. So far, the collaboration has helped expand Phibro's U.S. swine product offering to include specialized vaccines.

On the flip side, macroeconomic uncertainty continues to pose a challenge for Phibro. Additionally, currency fluctuations, and a tough competitive scenario are major concerns for the company.

Zacks Rank & Key Picks

Phibro currently carries a Zacks Rank #2 (Buy). Other top-ranked medical stocks are Align Technology, Inc. (ALGN - Free Report) , Inogen, Inc. (INGN - Free Report) and Accelerate Diagnostics, Inc. (AXDX - Free Report) . Notably, Align Technology and Inogen sport a Zacks Rank #1 (Strong Buy), while Accelerate Diagnostics carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has an expected long-term adjusted earnings growth of almost 24.1%. The stock added roughly 32.8% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of around 80%.

Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock added roughly 12% over the last three months.

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