On Jul 1, 2015, we issued an updated research report on AptarGroup, Inc. ATR. The global provider of consumer product dispensing systems is poised to benefit from broad product diversification, expansive geographic reach and product introductions. Also, its incessant efforts to reduce costs and lower resin prices will aid margins.
In the Beauty and Home segment, six new sunscreen products were introduced in North America, many of them using AptarGroup’s bag-on valve technology. Unilever plc UL selected the bag-on valves for Suave brands’ new line of spray lotion. In the beauty market, AptarGroup’s pumps were selected for a variety of new fragrances.
In the Food and Beverage segment, the SimpliSqueeze valve technology for clean and control dispensing continues to see success. In the first quarter, Unilever introduced an inverted bottle with custom dispensing closure and SimpliSqueeze technology for their flagship Hellmann's Mayonnaise in the U.S. The Daisy Brand sour cream is now in the market in a new inverted punch package, utilizing AptarGroup’s custom pouch fitment enclosure with SimpliSqueeze technology.
To improve its profitability in the Beauty & Home business, AptarGroup has implemented a series of measures by reducing costs as well as adjusting its management structure in North America. The company expects to achieve roughly $10 million in savings in 2015. AptarGroup’s margins should also benefit from the decrease in resin prices.
AptarGroup continues to have a strong balance sheet with net debt-to-capital ratio of 30% as of Mar 31, 2015. The company’s board of directors had authorized a $350 million share repurchase program in Oct 2014. Overall, AptarGroup spent approximately $341 million to repurchase 4.5 million shares of its common stock in 2014. The accelerated share repurchase program program has been 80% completed, leaving further scope from share repurchases in 2015.
In the Pharma segment, especially in the prescription drug market, AptarGroup’s two largest therapeutic categories allergy and asthma/COPD continues witness strong momentum. In the allergy treatment area, the company is benefiting from the predicted harsh allergy season in the U.S. and shift of customers from prescription drug to over-the-counter medicines,
Moreover, in the first quarter, the company’s innovative unit dose delivery system was chosen for a new prescription supplement to treat vitamin deficiency and its gel delivery system was chosen for the first and only gel nasal system for testosterone products approved by the FDA. In the consumer healthcare market, the company continues to benefit from strong demand for natural spray pumps or nasal decongestants, cough and cold treatments, and also spray devices for dermal applications.
In the beverage market, orders have begun returning to normalized level. The company also witnessed growth in the liquid concentrate area. Kraft Foods Group, Inc. KRFT recently introduced a Maxwell House Iced Coffee Concentrate in Europe using AptarGroup’s dosing pumps and SimpliSqueeze systems. The company expects continued growth in emerging markets, particularly in Latin America where it is growing in both food and beverage markets.
Furthermore, the estimates for AptarGroup have moved north over the past 60 days. The Zacks Consensus Estimate for 2015 increased 1% to $2.81 per share and for 2016 the same went up 1% to $3.07.
AptarGroup carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Another stock that warrants a look in the same industry is Sealed Air Corporation SEE, which holds the same rank as AptarGroup.
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