The Company is engaged in the development, manufacture and marketing of specialty performance ingredients and products for the food, feed and medical sterilization industries.
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Maltbie's Mix
Long On BCPC, Short On INTU
Robert Maltbie 03.24.08, 4:15 PM ET
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Balchem is a manufacturer of specialty performance ingredients for the food, animal feed, pharmaceutical and medical sterilization industries. The company's products provide essential nutrients for animal health and enhance therapeutic performance, taste, packaging and shelf life for human food and pharmaceutical markets.
We see 20% to 25% top line and bottom line growth, with 2008 earnings per share (EPS) reaching $1.10, driven by the following factors:
1. Strong demand for poultry in emerging economies is driving demand for choline, an essential poultry nutrient. Acquisitions have quadrupled Balchem's choline business.
2. Encapsulated products in the dairy market deliver nutrients in the harsh environment of the bovine gastrointestinal tract. The company's proprietary products have minimal competition and only a 10% domestic market penetration.
3. Encapsulated products in human nutrition deliver essential nutrients in frozen and packaged foods, including health bars and drinks. The company's encapsulation technology and domestic demand for packaged foods and nutritious snacks are driving growth.
4. Pharmaceutical applications for Balchem's encapsulation technology include calcium products for osteoporosis. Several research and development projects are in place to investigate the use of Balchem's technology with existing ethical and generic drugs.
There are two risks for this purchase. First, increases in raw material prices for choline production have pressured gross margins in 2007. Second, demand growth for poultry products in emerging economies may soften with weaker growth brought on by U.S. economic vulnerability