Prestige Consumer Healthcare Inc PBH

Step Back in Clear Eyes Recovery and Macro Challenges Weigh on Prestige in Near Term

Prestige Consumer Healthcare is a pure-play over-the-counter healthcare player with significant exposure in the US and Australia. We expect the firm to grow through product innovations, increased household penetration, and e-commerce expansion. Once a brand gains consumer trust and starts taking share, Prestige has looked to expand indications laterally by targeting similar symptoms, thereby broadening its end markets. For example, Dramamine for a long time only played in the motion sickness space, but Prestige has spent the last number of years expanding its indication to the nausea market. While these outbreaks of categories can certainly expose Prestige to new competition, we believe it also affords the firm a new set of customers that it can win over. And given Prestige’s focus in small and niche categories, we don’t expect the company to try and compete with blockbuster brands from consumer packaged goods, or CPG, giants. Rather, we believe it will seek out adjacent categories that might be underpenetrated or composed of minor brands to displace with its recognizable brands.