Perrigo (PRGO) Down 11.7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Perrigo (PRGO). Shares have lost about 11.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Perrigo due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Beats Q2 Earnings & Sales Estimates
Perrigo reported adjusted earnings of 63 cents per share in second-quarter 2023, beating the Zacks Consensus Estimate of 54 cents. Earnings were up 46.5% year over year. The upside can be attributed to favorable discrete tax benefits from the resolution of various tax matters and lower operating expenses incurred by the company during the quarter.
Net sales increased 6.4% year over year to $1.19 billion, surpassing the Zacks Consensus Estimate of $1.18 billion. Excluding the negative currency impact, sales rose 6.6%. The upside was driven by strategic pricing actions undertaken by management during the quarter, sales from the newly-acquired HRA Pharma and the acquisition of the U.S. & Canadian Good Start infant formula brand. Organic net sales (excluding the effects of acquisitions and divestitures and the impact of currency) were up 0.8% year over year.
Segment Discussion
CSCA: The segment’s net sales in the second quarter of 2023 came in at $750.8 million, up 3.1% year over year, driven by acquisitions and strategic price increases. However, this upside was partially offset by purposeful SKU prioritization actions to enhance margins as part of the company's Supply Chain Reinvention Program undertaken last year.
CSCI: The segment reported net sales of $442.4 million, up 12.4% from the year-ago period’s levels. At constant-currency (cc) rates, sales were up 12.8% year over year. Organically, sales increased 7.1%. Segment revenues benefited from higher sales of HRA Pharma brands and strategic pricing actions. An unfavorable currency movement negatively impacted sales.
2023 Guidance
Perrigo reiterated its financial guidance for 2023. Management expects to report net sales growth in the range of 7-11%. Adjusted earnings per share are expected to be between $2.50 and $2.70. The adjusted tax rate is expected to be around 17%, while the company expects to record interest expenses of about $180 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -9.15% due to these changes.
VGM Scores
Currently, Perrigo has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Perrigo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Perrigo is part of the Zacks Medical - Products industry. Over the past month, Stryker (SYK), a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended June 2023 more than a month ago.
Stryker reported revenues of $5 billion in the last reported quarter, representing a year-over-year change of +11.2%. EPS of $2.54 for the same period compares with $2.25 a year ago.
Stryker is expected to post earnings of $2.44 per share for the current quarter, representing a year-over-year change of +15.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
Stryker has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Perrigo Company plc (PRGO) : Free Stock Analysis Report
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