Phibro Animal Banks on Diverse Portfolio, Competition Rife

Tuesday, 17 October 2017 06:11 Written by  Read 5 times
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On Oct 16, we issued an updated research report on Phibro Animal Health Corporation (PAHC - Free Report) . This NJ-based company is a leading global diversified animal health and mineral nutrition company.

Over the last six months, Phibro has been trading above the broader industry. Currently, the stock has gained 35.9% compared with 10.9% of the broader industry.

Animal Health was a key contributor, delivering positive growth over the last few quarters. According to Phibro, its animal health products are excellent in preventing, controlling and treating diseases in animals as well as improving nutrition to improve health. We believe a diverse portfolio will allow the company to address the distinct growing conditions of livestock in different regions of the world.

Outside the United States, Phibro has extended its reach to Brazil and other countries in South America, China, India and Asia Pacific, Russia and Africa. This we feel will help the company counter competition.

The company continues 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 its performance.

On the flip side, Phibro operates in highly competitive industries. With respect to its major products, it faces threat from a substantial number of global and regional players. Furthermore, withdrawal of approval for Mecadox (carbadox) by the FDA is a concern. Additionally, Phibro conducts operations globally, which entails transactions in a variety of currencies. As a result, currency fluctuation is a major issue for the company.

Zacks Rank & Key Picks

Phibro carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the medical sector are Abbott (ABT - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) . Abbott, IDEXX Laboratories and Thermo Fisher carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Abbott has a long-term expected earnings growth rate of 10.7%. The stock rallied roughly 32.7% over the last year.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock gained 40.9% last year.

Thermo Fisher has a long-term expected earnings growth rate of 11.7%. The stock gained 26.1% last year.

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