Prestige Turns In Weak 3Q

Prestige Brands Holdings PBH delivered weak third-quarter results, as expected, but the news wasn't all bad. We're sticking with our fair value estimate, although the turnaround at Prestige could take more than a year to play out. With a poor cold and cough season and the voluntary recall of its pediatric cold and cough medicines to contend with, Prestige saw total sales for the quarter stay essentially flat with the year-ago period. We had anticipated some of this, and we've fully baked the firm's full-year forecast of 2%-4% top-line growth into our assumptions. Gross margins also declined on the negative impact of product mix, and with increased advertising costs more than offsetting reduced general and administrative expenses, operating income and operating margins declined as well.