Phibro (PAHC) Focuses On Growth Amid Pricing Pressure

On Aug 16, 2016, we issued an updated research report on New Jersey-based Phibro Animal Health Corporation (NASDAQ:PAHC) – a leading global diversified animal health and mineral nutrition company. The company provides a broad range of products for food animals including poultry, swine, beef and dairy cattle as well as aquaculture.

Ahead of its fourth-quarter fiscal 2016 earnings, we note that, Phibro is advancing well with its Animal Health product portfolio. We are encouraged to note that, Phibro is a leading provider of Medicated Feed Additives (MFA) products and is well poised to capture the huge and growing animal health market worldwide.

Data by Vetnosis (a research and consulting firm specializing in global animal health and veterinary medicine) also supports our view with their projected CAGR (compound annual growth rate) of approximately 5.9% (from 2014–2019) for MFA products. In terms of revenues, Phibro was the third largest business in the MFA sector.

Currently, the company is focused on expanding its footprint in the poultry, swine and cattle industries in both the domestic and international markets. The complementary nature of its animal health and mineral nutrition portfolio provides Phibro with unique cross-selling opportunities that can aid in reaching out to new customers or reinforce relationships with existing ones.

Moreover, the company has been expanding its share in many significant emerging markets for quite some time now. Of late, the company has ramped up penetration of some of its specialties in the dairy industry in the Latin and South American markets. Currently, the company is expanding its dairy business in the markets of Australia, Brazil and Mexico.

However, considerable customer consolidations are anticipated to consequently elevate the product pricing pressures that Phibro’s business faces. Additionally Phibro also faces competition from generic alternatives of some of its products that may weigh on its future financial health and operational performance.

Currently, Phibro carries a Zacks Rank #3 (Hold).

Key Picks in the Sector

Some of the better-ranked medical products stocks are NuVasive, Inc. (NASDAQ:NUVA) , Quidel Corp. (NASDAQ:QDEL) and GW Pharmaceuticals plc (NASDAQ:GWPH) . All the three stocks sport a Zacks Rank #1 (Strong Buy).