Why Prestige Brands Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Prestige Brands (NYSE: PBH  ) , a marketer of over-the-counter health care and household cleaning products, jumped as much as 14% after it announced the acquisition of Australia's Care Pharmaceuticals.

So what: Although financial terms of the deal weren't announced, the press release does note that Care Pharmaceuticals generates approximately $18 million in revenue annually from its core line of over-the-counter health products -- most notably Fess, which treats cold and allergy symptoms. Even more important, this acquisition gives Prestige Brands the opportunity to rapidly increase its Asia-Pacific presence. On the heels of the announcement, research firm Sidoti upgraded Prestige Brands to "buy" from "neutral" and hiked its price target to $41 from $32, implying 35% upside from yesterday's close. Research firm B. Riley joined the party as well, initiating Prestige with a buy rating and a $38 price target.

Now what: Moving into the rapidly growing Asia-Pacific region is a smart move for Prestige, which certainly could use the spark, with organic growth of its over-the-counter products drying up domestically. In the fourth quarter, Prestige Brands' 14 core OTC products delivered 9.3% organic growth. For this fiscal year, Wall Street anticipates that growth will be nearly flat. I'm not sold on Prestige's lofty valuation just yet, as acquisitions take time to integrate and there are often some "hiccups" involved for the acquiring party. However, I would certainly recommend keeping a watchful eye on Prestige Brands by adding it to your Watchlist.

Craving more input? Start by adding Prestige Brands to your free and personalized Watchlist so you can keep up on the latest news with the company.

As Prestige Brands has shown us, profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's latest free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2528780, ~/Articles/ArticleHandler.aspx, 9/18/2014 3:44:59 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement