Yahoo Finance Why Is Perrigo (PRGO) Down 15.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Perrigo (PRGO). Shares have lost about 15.1% 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 catalysts.
Q1 Earnings Top, Sales Lag Estimates
Perrigo reported adjusted earnings of 29 cents per share in the first quarter of 2024, beating the Zacks Consensus Estimate of 24 cents. Earnings declined 35.6% year over year, primarily due to a negative financial impact of 30 cents per share for actionsto augment and strengthen the company’s infant formula business.
Net sales declined 8.4% year over year to $1.08 billion, missing the Zacks Consensus Estimate of $1.09 billion. The downside was due to lower net sales in infant formula and the negative impact of purposeful SKU prioritization actions to enhance margins as part of the company's Supply Chain Reinvention Program undertaken in 2022.
During the quarter, sales declined 1.2% on account of exited product lines and 0.3% due to unfavorable currency movement. At constant currency (excluding foreign currency translation), sales fell 8.2%. Organic net sales (excluding the effects of acquisitions and divestitures and the impact of currency) declined 7.0% year over year.
Segment Discussion
CSCA: The segment’s net sales in the first quarter of 2024 came in at $644.1 million, down 15.7% year over year. The downside was caused by inventory de-stocking at U.S. retail customers, which resulted in lower net sales of store brand offerings across most product categories.
CSCI: The segment reported net sales of $437.9 million, up 4.7% from the year-ago period’s levels. Segment revenues benefited from growth in net sales of Skin Care and Women's Health categories, strategic pricing actions and new products. At constant-currency rates, sales were up 5.5% year over year. Organically, sales increased 7.0%.
2024 Guidance
Perrigo reiterated its previously issued financial guidance for 2024. Management expects total net sales growth to be flat year over year. Adjusted earnings per share (EPS) are expected to be between $2.50 and $2.65.
The adjusted tax rate is expected to be around 20.5%. Perrigo expects to record interest expenses of about $180 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.95% due to these changes.
VGM Scores
At this time, Perrigo has a subpar Growth Score of D, 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. 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, SurModics (SRDX), a stock from the same industry, has gained 32.9%. The company reported its results for the quarter ended March 2024 more than a month ago.
SurModics reported revenues of $31.96 million in the last reported quarter, representing a year-over-year change of +17.5%. EPS of $0.07 for the same period compares with -$0.40 a year ago.
For the current quarter, SurModics is expected to post a loss of $0.31 per share, indicating a change of -159.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for SurModics. Also, the stock has a VGM Score of F.
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