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Here's Why Phibro Animal Health is Worth a Buy Right Now

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PEBO vs. FIBK: Which Stock Is the Better Value Option?

Phibro Animal Health Corporation PAHC has been gaining investor confidence from consistently impressive results. The stock has surged 45.4% over the past year, ahead of the S&P 500’s 17.8% rally and the broader industry’s 17.7% rise.

Moreover, the company has a market cap of $1.34 billion. Its earnings growth rate for 2018 is also favorable at 11.9% compared with the industry’s 11.3% increase.

Armed with solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.

The company’s estimate revision trend for the current year has also been positive. In the last 60 days, four analysts revised their estimates upward with no movement noticed in the opposite direction. The stock has seen the Zacks Consensus Estimate for earnings being revised around 7.6% upward to $1.69 per share.

Per our Style Score, Phibro sports a Growth Score of B, reflective of the company’s strong, bright future.

Our research shows that stocks with a Growth Style Score of A or B combined with a bullish Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

In this regard, this leading global diversified animal health and mineral nutrition company has a favorable Net Margin (Net Income/Sales) of 7.9% against the industry’s negative 7.4%. The company’s sales to assets ratio of 1.23 compared with the industry’s 0.71 underlines the stock’s attractiveness as a lucrative option.

 

Let’s find out whether the recent positive trend is a sustainable one.

Solid Second-Quarter Fiscal 2018 Performance

Phibro ended second-quarter fiscal 2018 on an encouraging note. The company witnessed a considerable improvement across all segments.  Moreover, it believes that continuous investments in portfolio enhancement and developing organizational capabilities have started to pay off.

Solid Guidance

We are also upbeat about the raised guidance for fiscal 2018, indicative of the stock’s bull run to continue through the rest of 2018.

Impressive Efforts to Grow in the Emerging Markets

Phibro’s existing operations and established sales, marketing as well as distribution network in more than 65 countries, provide the company with ample scope to take advantage of global growth opportunities. Outside the United States, Phibro’s international footprint extends to key high-growth regions (countries with expected higher livestock production growth rate than the average tally) including Brazil and other countries in South America, China, India and Asia Pacific, Russia and former CIS (Commonwealth of Independent States) countries, Mexico, Turkey, Australia, Canada and South Africa apart from other countries in Africa. Phibro has continued to invest in the Far East belt, which has huge growth potential for poultry and dairy industries.

Strong Animal Health Business

Animal Health segment has remained a key contributing business, delivering positive growth year over year. Management believes that the company is well-positioned in the fastest growing food animal species segment of the animal health market with a significant presence in poultry and swine, projected by Vetnosis to grow worldwide at compound annual rates of 5.9% and 5%, respectively, between 2014 and 2019. With such optimistic trends prevalent in the market, Phibro’s Animal Health business is bound to perform well. 

Other Key Picks

Other top-ranked stocks in the broader medical sector include Bio-Rad Laboratories BIO, athenahealth, Inc. ATHN and Varian Medical Systems, Inc. VAR.

Bio-Rad Laboratories sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The company has a long-term expected earnings growth rate of 20%.

athenahealth is a Zacks #1 Ranked player. The company has a long-term expected earnings growth rate of 21.5%.

Varian Medical has a long-term expected earnings growth rate of 8%. The stock carries a Zacks Rank of 2.

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athenahealth, Inc. (ATHN) : Free Stock Analysis Report
 
Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
 
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