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Perrigo (PRGO) Misses on Q4 Earnings, to Sell Generic Unit

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Zacks Equity Research
·4 min read
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Perrigo Company plc PRGO reported fourth-quarter 2020 adjusted earnings of 93 cents per share, which missed the Zacks Consensus Estimate of $1.01. Earnings decreased 12.3% year over year.

Net sales decreased 2.5% year over year to $1.3 billion, slightly missing the Zacks Consensus Estimate of $1.33 billion. The year-over-year decline was due to lower worldwide net sales of cough/cold products. Organic net sales were down 4.7% year over year.

In a separate press release, the company announced that it has signed an agreement to sell its generic Rx Pharmaceuticals business to Altaris Capital Partners for a total consideration of $1.55 billion, which includes $1.5 billion cash. Perrigo will become a pure-play global consumer self-care company, following the completion of the sale that is expected by the end of the third quarter of 2021.

Despite the earnings and sales miss, Shares of Perrigo were up 11.5% during after-market trading hours on Mar 1, reflecting investor optimism on Rx Pharmaceuticals deal. However, the company’s stock has decreased 25.4% in the past year against the industry’s increase of 16.3%.

Segment Discussion

Perrigo reports its results under the following segments — Consumer Self Care Americas (“CSCA”), Consumer Self Care International (“CSCI”), and Prescription Pharmaceuticals (“RX”).

CSCA: Net sales of the segment in the fourth quarter of 2020 came in at $701 million, down 1.4% year over year. The sales decreased as COVID-19 negatively impacted sales of cough/cold products. However, decline in these segments was partially offset by new product sales and higher sales in Digestive Health category, Oral Self-Care category, and Skincare and Personal Hygiene category.

Net sales at CSCA decreased approximately 4.7%, organically.

CSCI: The segment reported net sales of $352 million, down 1.1% from the year-ago period. Sales declined in the CSCI segment as COVID-19 hampered sales of cough/cold skincare & personal hygiene products. Divested businesses and discontinued products hurt sales by $19 million and $5 million, respectively. However, $18 million in favorable currency movements, higher sales from new products, pain and VMS categories provided some respite. Organic sales decreased 1.9%.

Rx Segment: Net sales of the segment decreased 7.7% to $236 million. The downside can be attributed to loss of sales from discontinued products as well as lower sales of cough/cold products.

Full-Year Results

Perrigo reported revenues of $5.1 billion, up 5% year over year. Sales were up 1.9%, organically. The company’s adjusted earnings for 2020 were $4.02 per share, almost flat compared with $4.03 in the year-ago period.

2021 Guidance

Perrigo provided guidance for 2021. The company expects to deliver organic net sales growth of 3% in 2021. It expects adjusted earnings to increase approximately 7% and lie in the range of $2.50 to $2.70.

Perrigo Company plc Price, Consensus and EPS Surprise

Perrigo Company plc Price, Consensus and EPS Surprise
Perrigo Company plc Price, Consensus and EPS Surprise

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

Zacks Rank and Stocks to Consider

Currently, Perrigo is a Zacks Rank #3 (Hold) stock.

Some better-ranked stocks from the biotech/drug sector include Moderna, Inc. MRNA, Lexicon Pharmaceuticals, Inc. LXRX and Repligen Corporation RGEN. While Moderna sports a Zacks Rank #1 (Strong Buy), Lexicon and Repligen carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Emergent Biosolutions’ earnings per share estimates have moved up from $9.15 to $14.7 for 2021 in the past 60 days. The stock has risen 418.1% so far this year.

Lexicon’s loss per share estimates have narrowed from 66 cents to 17 cents for 2021 in the past 60 days. The company delivered an earnings surprise of 21.72%, on average, in the last four quarters. The stock has risen 154.1% so far this year.

Repligen earnings per share estimates have moved north from $2.03 to $2.19 for 2021 in the past 60 days. The company delivered an earnings surprise of 51.51%, on average, in the last four quarters. The stock has risen 140.1% so far this year.

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