It has been about a month since the last earnings report for Perrigo (PRGO). Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Perrigo due for a pullback? 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.
Q3 Earnings & Sales Missed Estimates
Perrigo reported third-quarter adjusted earnings of 81 cents per share, which missed the Zacks Consensus Estimate of 82 cents. The reported figure increased 26.6% year over year, primarily due to improved margins and lower variable expenses.
Net sales declined 3.2% year over year to $1.09 billion, which lagged the Zacks Consensus Estimate of $1.12 billion. The downside was due to lower net sales in the Nutrition category and loss of sales stemming from exited businesses and product lines.
During the quarter, sales dropped 1.3% year over year on account of exited businesses and product lines but benefited from favorable currency movement by 0.5%. At constant currency (excluding foreign currency translation), sales fell 3.7%. Organic net sales (excluding the effects of acquisitions and divestitures and the impact of currency) were down 2.4%.
Segment Discussion
CSCA: The segment’s net sales in the quarter were $671 million, down 4.6% year over year. The downside was due to previously disclosed lost distribution of lower-margin products in U.S. store brands across multiple product categories. Organic net sales fell 4.4%.
CSCI: The segment reported net sales of $416 million, down 1.0% from the year-ago period’s levels due to product line exits. Favorable currency movements partially offset this decline. At constant currency rates, sales were down 2.2% year over year. Organically, sales increased 1%.
2024 Guidance
Perrigo updated its guidance for sales. Management anticipates fiscal 2024 total net sales growth at the lower end of the previously forecasted ranges, with sales expected to decline 3% to 5% compared to the previous year. This revision in guidance was likely made on account of lower global seasonal demand in the first half of 2024 and expected lower distribution in the U.S. store brand in the second half of 2024.
Management now expects the adjusted tax rate to be 19-20% compared to the previous guidance of 20.5%.
Perrigo reiterated the rest of its financial guidance. Adjusted earnings per share (EPS) are expected to be between $2.50 and $2.65. The company expects interest expenses to be $180 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Perrigo has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 upward for the stock, and the magnitude of these revisions looks promising. 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, Zimmer Biomet (ZBH), a stock from the same industry, has gained 0.4%. The company reported its results for the quarter ended September 2024 more than a month ago.
Zimmer reported revenues of $1.82 billion in the last reported quarter, representing a year-over-year change of +4%. EPS of $1.74 for the same period compares with $1.65 a year ago.
Zimmer is expected to post earnings of $2.30 per share for the current quarter, representing a year-over-year change of +4.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.
Zimmer has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
