Prestige Consumer Healthcare (PBH) Slipped on Mixed Results and Reduced Guidance

Ariel Investments, an investment management company, released its “Ariel Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S equities rallied in the third quarter, driven by the Federal Reserve’s first rate cut of the year, strong corporate earnings, and broadening market participation. The continued enthusiasm for AI led to outsized gains in technology, while small caps outperformed as capital shifted into undervalued segments of the market. Against this backdrop, Ariel Fund returned +12.39% in the quarter, surpassing the Russell 2500 Value Index’s +8.17% return and lagging behind the Russell 2000 Value Index’s +12.60% gain. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Ariel Fund highlighted stocks such as Prestige Consumer Healthcare Inc. (NYSE:PBH). Headquartered in Tarrytown, New York, Prestige Consumer Healthcare Inc. (NYSE:PBH) develops, manufactures, markets, distributes, and sells pharmaceutical drugs and consumer products. The one-month return of Prestige Consumer Healthcare Inc. (NYSE:PBH) was -0.60%, and its shares lost 14.31% of their value over the last 52 weeks. On October 23, 2025, Prestige Consumer Healthcare Inc. (NYSE:PBH) stock closed at $62.59 per share, with a market capitalization of $3.08 billion.

Ariel Fund stated the following regarding Prestige Consumer Healthcare Inc. (NYSE:PBH) in its third quarter 2025 investor letter:

"Distributor of over-the-counter pharmaceutical drugs and products, Prestige Consumer Healthcare Inc. (NYSE:PBH), also declined following mixed earnings results and a downward revision to full year guidance. Sales were impacted by limited inventory in the eye care segment, but the announced acquisition of Pillar5, a leading sterile ophthalmic manufacturer, is expected to strengthen supply over time. While ophthalmic recovery will be gradual, PBH reaffirmed its free cash flow outlook, supporting continued share repurchases and strategic acquisitions. Outside of eye care, the core portfolio delivered as expected, including gross margin expansion. We believe PBH has room to close its valuation gap relative to peers in the consumer healthcare sector."

Prestige Consumer Healthcare Inc. (NYSE:PBH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 19 hedge fund portfolios held Prestige Consumer Healthcare Inc. (NYSE:PBH) at the end of the second quarter, compared to 23 in the previous quarter. In the fiscal first quarter of 2026, Prestige Consumer Healthcare Inc. (NYSE:PBH) reported revenue of $249.5 million compared to $267.1 million in the prior year’s quarter.  While we acknowledge the potential of Prestige Consumer Healthcare Inc. (NYSE:PBH) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Prestige Consumer Healthcare Inc. (NYSE:PBH) and shared Heartland Value Plus Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.