Balchem’s forecast revised higher for stronger-than-expected Q3 profit by Investing.com
On Tuesday, HC Wainwright maintained a buy rating on Balchem (NASDAQ:) Corporation (NASDAQ:BCPC) and raised its 12-month price target to $190 from $185. The adjustment follows Balchem’s third-quarter financial results, which reported $239.9 million in revenue. The figure was slightly below analyst expectations of $245.9 million but marked a 4.3% increase from the same period last year and an improvement from the $234.1 million reported in the second quarter of 2024.
Balchem’s third-quarter performance also reported GAAP earnings of $1.03 per diluted share, beating forecasts of $0.94. As a result, the company revised its forecast, now expecting Balchem’s GAAP earnings to reach $4.01 per share in 2024, an increase from the previous estimate of $3.81 per diluted share. The forecast for the full year 2025 was revised to $4.47 per share from the previous forecast of $4.40.
The company’s optimism is partly due to the continued growth expected in Balchem’s Human Nutrition and Health (HNH) segment, which is expected to support revenue growth and contribute to sequential profits in the coming quarters. The revised revenue forecast for 2024 stands at $963.4 billion, down slightly from the initial forecast of $974.8 billion. By 2025, the revenue forecast has been revised to $1.07 billion from the previous $1.09 billion.
The new price target of $190 indicates a slight downside to the company’s earnings relative to the rest of the world at 43.2 times from 45.6 times. However, the earnings per share (EPS) estimate used in this iteration for the next 12 months increased to $4.39 from the previous estimate of $4.05 per share, indicating a positive outlook for the company’s financial growth.
In other recent news, Balchem Corporation reported a record quarter for Q3 2024, with consolidated revenue reaching $240 million, marking a 4.3% year-over-year increase. The company also reported operating income of $48 million and a record adjusted EBITDA of $64 million. This recent development is attributed to strong results in the Personal Nutrition & Health and Specialty Products segment, as well as the successful launch of several new products.
In addition, Balchem’s management, including CEO Ted Harris and CFO Martin Bengtsson, expressed an optimistic view of the company, supported by the segment’s strong growth and strategic focus on marketing and research and development. Despite some challenges in the Animal Nutrition & Health segment, the company remains confident in its ability to sustain growth and deliver value to shareholders.
In addition to these outstanding financial indicators, Balchem has also announced its plans to increase its marketing and R&D budget, focusing on the anti-aging and weight loss markets. The company also expects to generate excitement about new products at the upcoming SupplySide West conference. Finally, Balchem has indicated that its effective tax rate will remain between 22% and 23%, with more M&A activity expected in 2025.
InvestingPro Insights
Balchem Corporation’s recent performance and HC Wainwright’s positive outlook are supported by several key metrics from InvestingPro. The company’s revenue for the past twelve months from Q3 2024 stood at $942.38 million, with quarterly revenue growth of 4.35% in Q3 2024, consistent with analyst views of continued growth.
InvestingPro Tips highlights Balchem’s strong dividend history, as it has increased its dividends for 14 consecutive years and maintained payouts for 38 years. This dividend growth consistency, along with a current dividend yield of 0.46%, underscores the company’s financial stability and commitment to shareholder returns.
The company’s profitability is reflected in its operating margin of 17.43% and gross margin of 34.47% over the past twelve months. These figures support HC Wainwright’s positive earnings projections for 2024 and 2025.
It’s worth noting that Balchem trades at a P/E ratio of 49.2, which InvestingPro Tips indicates is high relative to near-term earnings growth. This valuation metric is consistent with HC Wainwright’s adjustment to the comparable global earnings multiple in the calculation of its price target.
For investors who want a more comprehensive analysis, InvestingPro offers 13 additional tips for Balchem Corporation, which provides a deeper understanding of the company’s financial situation and market performance.
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