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

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Investors are likely to focus on Perrigo Company plc’s (PRGO - Free Report) growth plans, following its transformation into a pure self-care company, on the third-quarter 2021 earnings call.

Perrigo’s earnings performance has been mixed over the trailing four quarters. The company’s earnings beat estimates in three of the last four quarters and missed the same once, delivering an average negative earnings surprise of 6.49%. In the last-reported quarter, Perrigo delivered a negative earnings surprise of 18.03%.

Shares of Perrigo have gained 3.7% so far this year compared with the industry’s increase of 1.7%.

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Factors at Play

In the third quarter, the 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 through acquisitions. Significant sales growth of new products is likely to have boosted sales further during the soon-to-be-reported quarter.

Sales of cough/cold products have been adversely impacted by COVID-19 and dented the top line significantly in the past few quarters. The weak cough/cold season is expected to have hurt sales products in this category.

The impact of COVID-19 has been favorable for products other than cough and cold. During the third quarter, sales of Perrigo’s products are likely to have benefited as several key markets witnessed improved consumption patterns as demand trends improved amid widespread vaccinations. However, the extent of the impact of the pandemic on the third-quarter results remains to be seen amid the rising fear of a new wave of coronavirus infections.

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

The favorable impact of cost savings due to ongoing restructuring initiatives and operating expense discipline are likely to have boosted the bottom line. However, a rise in input costs is likely to have partially offset some of the gains.

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 63 cents per share and the Zacks Consensus Estimate of 65 cents, is -3.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Perrigo currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Perrigo Company plc Price and EPS Surprise

Perrigo Company plc Price and EPS Surprise

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

Stocks to Consider

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

FibroGen (FGEN - Free Report) has an Earnings ESP of +108.22% and a Zacks Rank #3.

ChemoCentryx (CCXI - Free Report) has an Earnings ESP of +9.89% and a Zacks Rank of 3.