Advertisement

Perrigo (PRGO) Q2 Earnings Surpass Estimates, Revenues Miss

Perrigo Company plc PRGO reported second-quarter 2020 adjusted earnings of  $1.03 per share, which beat the Zacks Consensus Estimate of 87 cents. The bottom line increased 19.8% year over year.

Net sales increased 6.1% year over year to $1.22 billion, missing the Zacks Consensus Estimate of $1.23 billion by a slight margin. The year-over-year growth was driven by addition of products from the recently closed Ranir acquisition, launch of generic albuterol sulfate and higher sales of over-the-counter (“OTC”) products. These were partially offset by a loss of $11 million in sales from discontinued products, $26 million from divested businesses and adverse impact of COVID-19 on international ales. Sales rose 10% excluding exited businesses and the impact of foreign currency movement. Organic net sales (excludes sales of Ranir products, exited businesses and the impact of currency) were up 2.6% year over year.

Moreover, the company’s business received a boost with lower-than-expected consumer pantry de-load in U.S. OTC market. Please note that demand for self-care products and drugs had increased in March due to stockpiling by customers amid COVID-19 pandemic.

Shares of Perrigo have increased 6.7% so far this year against the industry’s decline of 4.7%.

Segment Discussion

Perrigo now reports its results under the following segments — Consumer Self Care Americas (“CSCA”), Consumer Self Care International (“CSCI”) and Prescription Pharmaceuticals (“RX”). In the first quarter of 2019, the company initiated a process to transform itself from a healthcare to a consumer self-care company.

Last year, the company acquired Ranir Global Holdings LLC, the global leader in private label oral self-care market, as part of its transformation into a self-care company, which significantly boosted revenues of CSCA and CSCI segments.

CSCA: Net sales of the segment in the second quarter of 2020 came in at $628 million, up 7.8% year over year, driven by higher sales of OTC and nutrition businesses, increased demand related to COVID-19 and $63 million of net sales from oral self-care portfolio. These were partially offset by de-prioritization of certain products amid COVID-19 and normal pricing pressure on specific products. Net sales at CSCA increased approximately 1.6%, organically.

The company divested its Animal Health business for $185 million in cash to pet medication and wellness company, PetIQ PETQ, in 2019. The company lost sales of $22 million during the quarter from the exited animal health business.

CSCI: The segment reported net sales of $231 million, down 2% from the year-ago period. The decline was due to lower category sales owing to COVID-19 related bans and consumer pantry de-stocking. These were partially offset by new product sales of $23 million, especially weight loss product XLS Forte 5, and $19 million of net sales from Ranir's products. Organic sales decreased 3%.

Rx Segment: Net sales of the segment increased 12.9% to $270 million. The upside can be attributed to new product sales of $58 million, led by the launch of generic version of Teva’s TEVA inhaler — ProAir HFA — partially offset by lower dermatology volumes. The company lost $9 million in sales from discontinued products.

2020 Guidance

Perrigo maintained its outlook for 2020 that it had provided on its fourth-quarter 2019 earnings call.

Perrigo expects adjusted earnings in the range of $3.95 to $4.15 per share. It anticipated net sales to grow 6-7% year over year in 2020. Organic growth in net sales was expected to be approximately 3%.

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 Other Stocks to Consider

Currently, Perrigo is a Zacks Rank #2 (Buy) stock.

Another stock to consider from the biotech sector is Emergent Biosolutions Inc. EBS, sporting a Zacks Rank #1 (Strong 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 $3.45 to $3.58 for 2020 in the past 30 days. The company delivered an earnings surprise of 127.41%, on average, in the last four quarters. The stock has risen 145.7% so far this year.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Teva Pharmaceutical Industries Ltd. (TEVA) : Free Stock Analysis Report
 
Perrigo Company plc (PRGO) : Free Stock Analysis Report
 
Emergent Biosolutions Inc. (EBS) : Free Stock Analysis Report
 
PetIQ, Inc. (PETQ) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research