Phirbo's (PAHC) Rising Costs, Currency Headwind Ail Growth
Though Phirbo (PAHC) has raised prices on selective products, these increases do not fully compensate for the higher cost of freight and labor materials.
Phibro Animal Health Corporation’s PAHC existing operations and established sales are continuously being hurt by supply chain disruption and staffing problems amid the pandemic. The company currently carries a Zacks Rank #4 (Sell).
Phibro’s first quarter of fiscal 2022 earnings missed the Zacks Consensus Estimate. Revenues, though up year over year, declined sequentially. The business was hurt by continued supply chain and staffing problems. While Phirbo raised prices on selective products and realized increased volumes, these increases did not fully compensate for the higher cost of freight, labor materials and unfavorable currency movement. Combined, these items more than offset improvements in volume and price and reduced the company’s fiscal first-quarter margins.
Gross margin contracted 270 basis points (bps) to 30.1% while operating margin contracted 124 bps to 6.8% in the quarter under review.
Also, foreign exchange fluctuations and a stiff competitive landscape are other headwinds. The industries that the company caters to (especially swine and cattle customers) also faced issues like lack of processing availability and sudden drop in demand. The company had to close down many of its production facilities or operate at different rates due to the pandemic.
Phibro Animal Health Corporation Price
On a positive note, Phibro’s first-quarter fiscal 2021 revenues were up year over year backed by strong international demand for poultry and cattle products and stronger growth in the nutritional specialties and vaccine product lines. Growth in the Animal Health segment was driven by 6% growth in medicated feed additives (MFA) and other and even stronger growth in the nutritional specialties and vaccine product lines.
Internationally, the company is performing well. In the first quarter of fiscal 2022, Phibro registered growth in nutritional specialties driven by strong international growth in dairy products. The company has raised its revenue forecast for fiscal 2022 on improving business trends.
Over the past year, Phibro has outperformed its industry. The stock has gained 5.9% compared with the industry’s 3.6% fall.
A few better-ranked stocks from the broader medical space are Apollo Endosurgery, Inc. APEN, Cerner Corporation CERN and West Pharmaceutical Services, Inc. WST, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Apollo Endosurgery has a long-term earnings growth rate of 7%. The company‘s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 25.6%, on average.
Apollo Endosurgery has outperformed its industry over the past year. APEN has gained 129.1% compared with the industry’s 11.1% growth.
Cerner has a long-term earnings growth rate of 13.3%. The company’s earnings surpassed estimates in the trailing three of the trailing four quarters and met the same in one, delivering a surprise of 3.2%, on average.
Cerner has outperformed its industry over the past year. CERN has gained 18.8% against the industry’s 39.3% decline.
West Pharmaceutical has a long-term earnings growth rate of 27.6%. The company’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 29.4%, on average.
West Pharmaceutical has outperformed its industry over the past year. WST has rallied 65.2% compared with the industry’s 16.2% rise.
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Cerner Corporation (CERN): Free Stock Analysis Report
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