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Perrigo (PRGO) Down 8.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Perrigo (PRGO - Free Report) . Shares have lost about 8.2% 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 the most recent earnings report in order to get a better handle on the important drivers.

Perrigo Q1 Earnings Miss Estimates, Sales Beat

Perrigo reported second-quarter 2022 adjusted earnings of 43 cents per share, which missed the Zacks Consensus Estimate of 44 cents. Earnings declined 14% year over year. The downside was due to unfavorable currency movements and higher operating expenses, partially offset by higher sales volumes and improved pricing.

Net sales increased 14.3% year over year to $1.12 billion, beating the Zacks Consensus Estimate of $1.07 billion. The year-over-year increase was driven by higher sales from the newly acquired HRA Pharma, a continued recovery in sales of cough/cold products globally and higher demand for infant formula in the United States. These were partially offset by unfavorable currency movements and divested businesses. Organic net sales (excludes the effects of acquisitions and divestitures and the impact of currency) were up 17.2% year over year.

Segment Discussion

CSCA: Net sales of the segment in the second quarter of 2022 came in at $728 million, up 17.0% year over year. Sales increased due to a strong rebound in cough/cold sales, higher sales of oral allergy products and strong demand for store brand infant formula and Women’s Health products.

CSCI: The segment reported net sales of $394 million, up 9.7% from the year-ago period. Currency movements had an unfavorable impact of 16.1 percentage points on sales growth. Organically sales increased 10.6%. Segment revenues benefitted from the higher sales of HRA Pharma brands, higher store brand consumption in the United Kingdom, cough/cold products and Women’s Health products, partially offset by lower sales of products from the Healthy Lifestyle and VMS categories. Sales were negatively impacted by unfavorable currency movement and loss of sales in Russia and Ukraine.

2022 Guidance Revised

Perrigo decreased its earnings guidance for 2022. The company now expects adjusted earnings per share to be in the range of $2.25-$2.35, down from the previous guidance of $2.30-$2.40, to account for the worse than previously-expected impact of currency translation. It still expects total revenues in 2022 to grow 8.5%-9.5%.

The company also raised its guidance for organic growth from the range of 8-9%.to 9-10%.

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 C. 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 D. 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 #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Perrigo belongs to the Zacks Medical - Products industry. Another stock from the same industry, Agios Pharmaceuticals (AGIO - Free Report) , has gained 6.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.

Agios Pharmaceuticals reported revenues of $5.58 million in the last reported quarter, representing a year-over-year change of


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