Prestige Reports In-Line 3Q

We don't expect to change our fair value estimate for Prestige Brand Holdings PBH following the firm's fiscal third-quarter earnings release. Sales were essentially flat with the year-ago quarter, while the gross margin expanded 120 basis points from last year's third quarter, to 52.9%, despite mounting cost pressures. The operating margin contracted 370 basis points, to 24.9%. However, Prestige increased its investment in advertising and promotional spending in the quarter to 14.2% of sales (up from 11.9% in the prior-year quarter) to support the launch of two new products. In our opinion, this was a wise investment that should propel sales growth over the near term.