Phibro Animal Health Corporation’s PAHC growth in the fiscal first quarter of 2025 is backed by sustained improvement in the Animal Health business. The company’s focus on advancing vaccine technologies instills optimism. A rebound of Mineral Nutrition and Performance Product businesses seems encouraging. Yet, adverse macroeconomic impacts are a concern for Phibro’s operations.
In the past year, this Zacks Rank #2 (Buy) company’s shares have rallied 107.9% compared with the industry’s 20.9% growth and the S&P 500 composite's 32.4% increase.
The renowned animal health and mineral nutrition company has a market capitalization of $872 million. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 25.47%.
Let’s delve deeper.
Phibro’s Key Tailwinds
Animal Health Business Growth Continues: With the rise in natural resource scarcity, demand for efficient food production for animals (poultry, swine and cattle) has increased. Phibro’s key animal health products, including MFAs (Medicated Feed Additives) and nutritional specialty products, enhance nutrition. The company also manufactures vaccines protecting animals from viral and bacterial diseases. These are key growth areas for Phibro, both in the short and medium term. The company has been actively investing in these growth drivers to achieve its targets.
Phibro recently completed the acquisition of the medicated feed additive product portfolio and certain water-soluble products from Zoetis Inc.
The company ended the fiscal first quarter with the Animal Health business experiencing 14% sales growth year over year, led by a robust 22% increase in vaccine net sales. This increase was driven by poultry product introductions in Latin America and a rise in both domestic and international demand. MFAs and Other, as well as nutritional specialty businesses, reported strong growth during the quarter.
Prospering Vaccine Business: PAHC is continuously making investments to expand vaccine manufacturing capacity at several locations. Recently, Phibro began operations at a new vaccine production facility in Guarulhos, Brazil, that manufactures and markets autogenous vaccines against animal diseases for swine, poultry and aquaculture.
The vaccine business witnessed a robust 22% improvement in the fiscal first quarter of 2025, driven by a strong uptake across various regions, especially in Latin America. It also benefited from growing domestic as well as international demand.
Recovery Within the Mineral Nutrition and Performance Product Businesses: Despite a challenging macro environment, the Mineral Nutrition business grew 5% year over year during the fiscal first quarter. The growth was primarily backed an increased demand for trace minerals. Also, Mineral Nutrition's gross profit increased, driven by higher sales volume. Meanwhile, sales of Performance Products during the quarter also increased 27% year over year owing to the rising demand for personal care product ingredients. The 64% increase in adjusted EBITDA highlights the recovery in the Mineral Nutrition and Performance Products businesses. In line with this, the company raised its fiscal 2025 sales guidance.
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Phibro’s Key Headwind
Macroeconomic Concerns: In the current scenario, Phibro’s business is severely affected by economic sanctions, bans and broader military conflicts. Other factors include supply-chain and logistic disruptions, volatility in foreign exchange rates and interest rates, and inflationary pressures on raw materials and energy. Consequently, these macroeconomic factors could reduce Phibro’s profitability.
In the fiscal first quarter of 2025, the cost of goods sold increased 8.1% from the prior-year level.
Estimate Trend for Phibro
The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) has moved 2.5% north to $1.61 in the past 30 days.
The consensus estimate for revenues is pegged at $1.18 billion, indicating a 15.6% rise from the year-ago reported number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Globus Medical GMED and Penumbra PEN.
Haemonetics has an earnings yield of 5.02% compared with the industry’s 1.18%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.39%. Its shares have risen 3.6% compared with the industry’s 19.9% growth in the past year.
HAE carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Globus Medical, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.1%. Shares of the company have rallied 81.8% compared with the industry’s 14.5% growth. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.65%.
Penumbra, carrying a Zacks Rank #2 at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have risen 3.2% compared with the industry’s 14.5% growth over the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.
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