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What's in Store for Perrigo (PRGO) This Earnings Season?

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Perrigo Company plc (PRGO - Free Report) is scheduled to report fourth-quarter 2020 results on Mar 1, before market open. In the last reported quarter, the company delivered an earnings surprise of 10.71%.

The company’s earnings beat estimates in three of the past four quarters and missed the same once, delivering an average surprise of 7.74%.

Shares of Perrigo have lost 29.1% in the past year against the industry‘s increase of 9.6%.

Factors at Play

In the fourth quarter, performance of Perrigo’s Consumer Self Care Americas (“CSCA”) and Consumer Self Care International (“CSCI”) segments is expected to have been aided by the products added following the acquisition of Ranir Global Holdings.

Moreover, new products have been witnessing significant sales growth. Oral Care assets of High Ridge Brands acquired in April are likely to have boosted sales in the soon-to-be reported quarter. Moreover, launch of store brand equivalent of over-the-counter Voltaren arthritis pain drug in early September is likely to have brought additional revenues during the quarter.

However, loss of sales from the recall of Ranitidine and albuterol sulfate inhalation aerosol, discontinued products and exited business, especially its Animal Health business sold to PetIQ (PETQ - Free Report) , might have offset the gain from the new products.

The COVID-19 pandemic boosted demand for Perrigo’s certain products in the first nine months of 2020, driving revenues. However, the pandemic hurt products of some segments, especially cough and cold products. The extent of the impact of the pandemic on the fourth- quarter results remains to be seen.

Although Perrigo is looking to spin-off its Rx business, higher sales of new products in the Rx segment and continued moderation of pricing pressure in the generics industry are likely to have driven segment sales.

Meanwhile, the favorable impact of the ongoing restructuring initiatives and operating expense discipline are likely to have boosted the bottom line.

The company is also facing a tax liability litigation of approximately $1.9 billion in Ireland . Investors will be looking to know more about the litigation on the fourth-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Perrigo in this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate of 99 cents per share and the Zacks Consensus Estimate of $1.01, is -2.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Perrigo carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are two biotech stocks that have the right combination of elements to beat on earnings this time around.

Organogenesis Holdings Inc. (ORGO - Free Report) has an Earnings ESP of +13.04% and a Zacks Rank #2.

Aldeyra Therapeutics, Inc. (ALDX - Free Report) has an Earnings ESP of +2.60% and a Zacks Rank #3.

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