Shares Of AptarGroup Slump On Disappointing Q3 Forecast

(RTTNews) - Shares of consumer product dispensing systems maker AptarGroup, Inc. (ATR | Quote | Chart | News | PowerRating) slid Friday morning after the company issued disappointing third quarter guidance Thursday after the closing bell.

The stock slipped about 12%, down $5.44 to $38.09 a share by 11:45 am Eastern Time. Shares of the Crystal Lake, Illinois-based company broke through support and hit their lowest levels since late March.

AptarGroup reported an increase in second quarter profit on higher sales, raised its quarterly dividend and provided third quarter guidance below current Wall Street expectations.

Second quarter net income for Aptar increased 22.5% to $45.27 million or $0.64 per share from $36.97 million or $0.52 per share in the same quarter a year ago, beating street expectations of $0.63 per share.

The board increased the quarterly dividend by 15% to $0.15 per share, payable August 20, 2008 to shareholders of record as of July 30, 2008. The increase brings the annual dividend rate to $0.60 per share up from $0.52 per share.

The company expects third quarter earnings in the range of $0.55 to $0.58 per share, below current consensus expectation of $0.62 per share for the quarter.

Sales for the quarter increased 17% to $551.32 million from $472.88 million in the same quarter a year ago, exceeding consensus estimates of $546.04 million. Dispensing system sales accounted for 6% of the growth while changes in exchange rates contributed 11%.

Peter Pfeiffer, President and Chief Executive Officer said, "We benefited from changes in currency exchange rates and the broad diversification of our business. The quarter started strongly but we saw some softness toward the end of the quarter particularly in the personal care, fragrance/cosmetic and household markets. This softness was offset by increased demand from the pharmaceutical and food/beverage markets."

Operating income increased to a record $65.2 million, up 13% from $57.5 million a year ago primarily due to the strong performance of the Pharma segment.

For six-month period, net income increased 23.5% to $82.2 million and sales increased 17% $1.1 billion from the prior-year period.

In late May, KeyBanc Capital downgraded AptarGroup shares to Hold from Buy, as risk/reward became balanced.

While there is potential for an acceleration of revenue and earnings growth in 2009, analyst Christopher Manuel believed current valuation reflected his expectation for organic growth of 6%-8% over the balance of 2008, leaving the risk/reward spectrum balanced.

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