Perrigo (PRGO) Lags on Q3 Earnings & Sales, Lowers '23 View
Perrigo Company plc PRGO reported adjusted earnings of 64 cents per share in third-quarter 2023, missing the Zacks Consensus Estimate of 65 cents. Earnings were up 14.3% year over year. The upside can be attributed to lower operating expenses incurred by the company during the quarter.
Net sales increased 2.2% year over year to $1.12 billion, missing the Zacks Consensus Estimate of $1.19 billion. The upside was driven by the acquisition of the U.S. & Canadian Good Start infant formula brand and favorable currency movement.
During the quarter, sales rose 2.1% on account of favorable currency movement. At constant currency (excluding foreign currency translation), sales rose 0.1%. Organic net sales (excluding the effects of acquisitions and divestitures and the impact of currency) were down 1.2% year over year.
Segment Discussion
Perrigo reports its results under the following segments — Consumer Self Care Americas (“CSCA”) and Consumer Self Care International (“CSCI”). Per management, the company gained market share in both business segments during the quarter compared with the year-ago period’s levels.
CSCA: The segment’s net sales in the third quarter of 2023 came in at $703.5 million, down 2.6% year over year. The downside was caused by purposeful SKU prioritization actions to enhance margins as part of the company's Supply Chain Reinvention Program undertaken last year and lower net sales of legacy Nutrition products in the United States. Strategic pricing actions and new product sales partially offset the downside.
CSCI: The segment reported net sales of $420.3 million, up 11.2% from the year-ago period’s levels. Segment revenues benefited from strategic pricing actions, new product sales and favorable currency movement. At constant-currency (cc) rates, sales were up 5.2% year over year. Organically, sales increased 6.2%.
2023 Guidance
Perrigo lowered its financial guidance for 2023. Management now expects to report net sales growth in the range of 4-6%, down from the previously issued guidance of 7-11%.
Adjusted earnings per share are now expected to be between $2.50 and $2.60 (previously $2.50 to $2.70). The Zacks Consensus Estimate for earnings stood at $2.60 per share.
Shares of Perrigo were down 5.2% in pre-market trading on Nov 7, likely due to the curtailed guidance. In the year so far, the stock has lost 15.7% compared with the industry’s 10.9% decline.
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The adjusted tax rate is expected to be around 14% (previously 17%). Perrigo expects to record interest expenses of about $180 million (maintained).
Perrigo Company plc Price
Perrigo Company plc price | Perrigo Company plc Quote
Zacks Rank & Stocks to Consider
Perrigo currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the overall healthcare sector include Acadia Pharmaceuticals ACAD, Alkermes ALKS and Apellis Pharmaceuticals APLS, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 30 days, estimates for Acadia’s 2023 loss per share have narrowed from 41 cents to 37 cents. During the same period, the earnings estimates per share for 2024 have risen from 60 cents to 68 cents. Shares of ACAD are up 51.2% in the year-to-date period.
Earnings of Acadia beat estimates in two of the last four quarters while missing the mark on the other two occasions, witnessing an average earnings surprise of 20.33%. In the last reported quarter, Acadia’s earnings beat estimates by 108.33%.
In the past 30 days, the estimate for Alkermes’ 2023 and 2024 EPS have increased from $1.61 to $1.63 and $1.93 to $2.14, respectively. Shares of ALKS are down 5.1% in the year-to-date period.
Earnings of Alkermes beat estimates in each of the last four quarters, witnessing an average earnings surprise of 93.34%. Alkermes’ earnings beat estimates by 45.45%.
Apellis Pharmaceuticals’ loss estimates for 2023 have narrowed from $4.89 to $4.60 per share in the past 30 days. During the same period, the loss estimates per share for 2024 have narrowed from $2.77 to $1.94. Year to date, Apellis Pharmaceuticals’ stock has lost 9.4%.
Apellis Pharmaceuticals beat earnings estimates in two of the last four quarters while missing the mark on the other two occasions, witnessing a negative earnings surprise of 3.91% on average. In the last reported quarter, APLS reported a negative earnings surprise of 39.29%.
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