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Is a Beat in Store for Perrigo (PRGO) This Earnings Season?

Zacks Equity Research

Perrigo Company plc PRGO is scheduled to report fourth-quarter 2019 results before market open on Feb 27.In the last reported quarter, Perrigo delivered a positive earnings surprise of 11.83%.

The company’s earnings beat the Zacks Consensus Estimate in three of the last four reported quarters and missed the same once with the average positive surprise being 7.7%.

Shares of the company have gained 22.6% in the past year compared with the industry’s increase of 8.2%.

Let’s see how things have shaped up for this announcement.

Factors to Consider

The addition of products following the acquisition of Ranir Global Holdings in July 2019 boosted sales of Perrigo’s Consumer Self Care Americas (“CSCA”) and Consumer Self Care International (“CSCI”) segments in the third quarter. The favorable impact is likely to have continued in the fourth quarter. Moreover, the new products saw improved sales in the last three of quarters– a trend that most likely continued in the soon-to-be-reported quarter. However, loss of sales from recall of Ranitidine, discontinued products and exited business, especially its Animal Health business sold to PetIQ PETQ, might have offset the gain from the new products.

Although Perrigo is looking to spin-off its Rx business, higher sales of new products in the Rx segment and continued moderation of pricing pressure in the generics industry are likely to have driven segment sales.

The favorable impact of the ongoing restructuring initiatives and operating expense discipline are likely to get reflected in the bottom line.

Fourth-Quarter 2019 Preliminary Results

In January 2020, Perrigo announced preliminary results for the fourth quarter. The CSCA segment reported year-over year preliminary net sales growth of more than 15% during the quarter with 11% increase in adjusted organic net sales, led by strong performances in both OTC and infant nutrition businesses. The CSCI segment also witnessed an 8% rise in reported net sales with adjusted organic net sales growth of 4%. Further, during the fourth quarter, net sales in the Rx segment grew 3% compared with last year.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Perrigo this time around.  The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($1.10 per share) and the Zacks Consensus Estimate ($1.08 per share) is +1.98%.

Zacks Rank:  Perrigo currently carries a Zacks Rank #2.

Perrigo Company plc Price and Consensus

 

Perrigo Company plc Price and Consensus

Perrigo Company plc price-consensus-chart | Perrigo Company plc Quote

Other Stocks That Warrant a Look

Here is a biotech stock that you may want to consider, as our model shows that it also has the right combination of elements to post an earnings beat in its upcoming release.

Vericel Corporation VCEL has an Earnings ESP of +11.29% and a Zacks Rank #1. The company is scheduled to release fourth-quarter results on Feb 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aduro Biotech, Inc. ADRO has an Earnings ESP of +23.08% and a Zacks Rank #1.

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Perrigo Company plc (PRGO) : Free Stock Analysis Report
 
Aduro Biotech, Inc. (ADRO) : Free Stock Analysis Report
 
PetIQ, Inc. (PETQ) : Free Stock Analysis Report
 
Vericel Corporation (VCEL) : Free Stock Analysis Report
 
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