A month has gone by since the last earnings report for Phibro Animal Health (PAHC Quick QuotePAHC - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Phibro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Phibro's Q1 Earnings Top Estimates, Net Sales Surge Y/Y

Phibro Animal Health delivered adjusted earnings per share (EPS) of 35 cents in the first quarter of fiscal 2025 compared with 14 cents in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 52.2%.

Without adjustments, the GAAP EPS in the quarter was 17 cents compared to a loss of 20 cents in the prior-year period.

Q1 Net Sales

In the quarter under review, net sales totaled $260.4 million, up 12.6% from the year-ago quarter’s level. However, the figure missed the Zacks Consensus Estimate by 6.3%.

Q1 Segmental Sales

The company conducts its operations via three segments — Animal Health, Mineral Nutrition and Performance Products.

In the first quarter of fiscal 2025, Animal Health’s net sales increased 13.7% to $182.5 million. The figure surpassed our model’s projection of $178.5 million.

Within the segment, net sales of medicated feed additives (MFAs) and others reflected 15% year-over-year growth. This was driven by increased sales of processing aids used in the fermentation industry and higher sales volumes due to increased demand for MFAs in domestic and international regions.

Nutritional specialty product sales increased 6% due to higher sales of microbial and companion animal products.

However, net vaccine sales showed a year-over-year rise of 22% due to an increase in poultry product demand in Latin America and a surge in domestic and international demand.

Net sales in the Mineral Nutrition segment rose 5% year over year to $59.1 million due to an increase in demand for trace minerals. Our model forecast was $56.8 million. 

Net sales in the Performance Products segment rose 27% to $18.8 million due to higher demand for the ingredients used in personal care products. This also surpassed our model’s projection of $15.9 million.

Margin Performance

Phibro’s fiscal first-quarter gross profit rose 23.3% year over year to $83.5 million. The gross margin expanded 280 basis points (bps) to 32.1% despite an 8.1% rise in the cost of goods sold.

Selling, general and administrative expenses in the reported quarter were $65.8 million, down 3.9% from the year-ago quarter’s levels. The operating profit totaled $17.7 million compared to the operating loss of 0.8 million in the same quarter in fiscal 2024. 

Financial Update

The company exited the first quarter of fiscal 2025 with cash and short-term investments of $89.8 million compared with $114.6 million at the end of the fourth quarter of fiscal 2024.

Cumulative net cash provided by operating activities at the end of the first quarter was $12.6 million compared with $16.2 million in the year-ago period.

Updated Fiscal 2025 Guidance

Phibro provided revised guidance for fiscal 2025 on a standalone basis without giving effect to the acquisition of Zoetis’ Medicated Feed Additive portfolio, completed in October 2024.

The company expects net sales to be $1.05 -$1.10 billion (earlier $1.04-$1.09 billion), implying 6% growth (previously 5%). The Zacks Consensus Estimate for the metric is pegged at $1.19 billion.

Adjusted EPS is expected to be in the range of $1.34-$1.48 (earlier $1.22-$1.37). The revised outlook indicates an 18% improvement compared to the earlier projected 9%. The Zacks Consensus Estimate is pegged at $1.57.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Phibro has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Phibro has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Phibro is part of the Zacks Medical - Products industry. Over the past month, Stryker (SYK Quick QuoteSYK - Free Report) , a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended September 2024 more than a month ago.

Stryker reported revenues of $5.49 billion in the last reported quarter, representing a year-over-year change of +11.9%. EPS of $2.87 for the same period compares with $2.46 a year ago.

Stryker is expected to post earnings of $3.87 per share for the current quarter, representing a year-over-year change of +11.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.

Stryker has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.