Phibro Animal Health (PAHC) came under pressure yesterday after reporting fiscal fourth EPS of $0.36 vs. $0.32%, which was $0.02 below expectations. Sales increased 16% to $255 million, aided by price hikes. Operating margins were flat as higher costs of products and investments in future growth, including new gene therapies for the company’s pet products, offset the higher volume.

The same factors will continue to pressure on operating in the June 30, 2023 fiscal year, with the company forecasting EPS of $1.28 to $1.38, versus $1.31 in the just completed year. The lackluster forecast, currency losses, and poor cash flow as the company’s inventory costs are rising have the stock trading close to a 10 year low.

However, the stock, once a glamour name as PHAC was going to help feed the developing world, is now a bargain at 13.6X expected EPS and a 2.8% dividend yield. I believe the market is overreacting to the company’s issues, which should lessen in intensity as the current fiscal year goes on, and the stock will benefit.

PAHC is now a buy under $18.5, my target is $22.