Morningstar | Aptar Reports Especially Strong 4Q, Fueled by Rapid Pharma Growth; Raising FVE to $89
Pharma segment results were the highlight of Aptar's fourth quarter and year, with solid margins and even more compelling top-line growth. Beauty and home results were also promising, with decent organic growth being masked by currency headwinds. Because of the ongoing restructuring efforts in food and beverage, segment organic growth and margins remain depressed as we enter 2019. On the whole, however, we've increased our near- to medium-term growth forecasts for Aptar's pharma segment. As a result, we raise our fair value estimate for Aptar to $89 per share from $86. The company's narrow moat rating is intact.Aptar's outstanding performance during the fourth quarter hinged on organic sales growth of 15% in its pharma segment. The firm added another 12% in growth from its acquisition of CSP. Segment adjusted operating margins also widened over the prior year, to a solid 30.1% in the fourth quarter. The growth was driven by double-digit organic sales increases in both metered-dose inhalers and consumer-oriented offerings, such as cold, cough, and eyecare products. We expect this rapid sales growth to gradually slow over the coming years as market share gains stabilize. The injectables business grew more slowly, at 5%, due to capacity issues. This is the primary driver for management's increase in capital spending guidance to $230 million-$250 million in 2019, versus $211 million in 2018. Although we forecast profits to grow, we think segment operating margins will remain stable around 30%.
Amid the ongoing restructuring of the food and beverage segment, adjusted operating margins fell to roughly 4% in the fourth quarter, with organic sales stagnant versus the prior year. An uptick in food sales was offset by especially weak beverage sales in China. As management continues to reduce costs and rationalize products sold in each region, we think margins will recover over the next two years as the program comes to a close.
AptarGroup is a supplier of a range of dispensing, sealing and active packaging solutions for the beauty, personal care, home care, prescription drug, consumer health care, injectables, food and beverage markets. The company's primary products are dispensing pumps, which dispense a spray or lotion from non-pressurized containers; closures, which are plastic caps that allow a product to be dispensed without removing the cap; aerosol valves, which dispense product from pressurized containers; and elastomeric primary packaging components, which include stoppers for infusion, antibiotic, lyophilization and diagnostic vials, pre-filled syringe components, as well as dropper bulbs and syringe plungers.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.