Recently, we reiterated Neutral recommendation on MWI Veterinary Supply (MWIV) with a target price of $73.00.
MWI reported an EPS of 87 cents in the first quarter of fiscal 2011, up 38.1% from the year-ago period and surpassing the Zacks Consensus Estimate of 73 cents.
The company reported revenues of $366.2 million for the quarter, surpassing the Zacks Consensus Estimate of $335 million and 55.1% higher than the corresponding period last year. While 28.6% of the growth is attributable to business operations of the company in the US, 26.5% came from the acquisition of Centaur Services.
Revenues over the last 10 years have grown at a CAGR of 20.2%. MWI’s expanding sales force has been able to increase market penetration by gaining new customers as well as increasing sales to existing customers.
At the end of December, the strength of field sales and telesales representatives (163 from 143) in the US were 217 (204 in the year-ago period) and 163 (143), respectively. In addition, MWI has been trying to focus on value added services including the e-commerce platform, pharmacy fulfillment programs for both production and companion animal products and other value-added services.
Internet sales to independent veterinary practices and producers grew by 57% year over year in the reported quarter. In December 2010, MWI has moved to a large 81,000 square feet distribution center in Visalia, California to accommodate the growth of that region.
The company’s organic growth in the US was driven by its prompt customer service in response to the bankruptcy and liquidation of a competitor, rapid adoption of the e-commerce platform by veterinarians; and the strong performance of the sales force. The expansion of the product portfolio to include flea, tick and heartworm products resulted in 4% revenue growth during the quarter.
MWI was able to increase its market share and is confident of maintaining this trend. The company expects to continue the growth momentum based on suitable acquisitions, sales force expansion, improvement in operating expense structure and investments in personnel, technology and distribution center.
Moreover, despite the veterinary market being highly competitive, strong bonding with both vendors and customers has enabled the company to achieve robust growth.
MWI VET SUPPLY (MWIV): Free Stock Analysis Report
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