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It has been about a month since the last earnings report for Perrigo (PRGO). Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Perrigo due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Q3 Earnings & Sales Missed Estimates
Perrigo reported third-quarter adjusted earnings of 81 cents per share, which missed the Zacks Consensus Estimate of 82 cents. The reported figure increased 26.6% year over year, primarily due to improved margins and lower variable expenses.
Net sales declined 3.2% year over year to $1.09 billion, which lagged the Zacks Consensus Estimate of $1.12 billion. The downside was due to lower net sales in the Nutrition category and loss of sales stemming from exited businesses and product lines.
During the quarter, sales dropped 1.3% year over year on account of exited businesses and product lines but benefited from favorable currency movement by 0.5%. At constant currency (excluding foreign currency translation), sales fell 3.7%. Organic net sales (excluding the effects of acquisitions and divestitures and the impact of currency) were down 2.4%.
Segment Discussion
CSCA: The segment’s net sales in the quarter were $671 million, down 4.6% year over year. The downside was due to previously disclosed lost distribution of lower-margin products in U.S. store brands across multiple product categories. Organic net sales fell 4.4%.
CSCI: The segment reported net sales of $416 million, down 1.0% from the year-ago period’s levels due to product line exits. Favorable currency movements partially offset this decline. At constant currency rates, sales were down 2.2% year over year. Organically, sales increased 1%.
2024 Guidance
Perrigo updated its guidance for sales. Management anticipates fiscal 2024 total net sales growth at the lower end of the previously forecasted ranges, with sales expected to decline 3% to 5% compared to the previous year. This revision in guidance was likely made on account of lower global seasonal demand in the first half of 2024 and expected lower distribution in the U.S. store brand in the second half of 2024.
Management now expects the adjusted tax rate to be 19-20% compared to the previous guidance of 20.5%.
Perrigo reiterated the rest of its financial guidance. Adjusted earnings per share (EPS) are expected to be between $2.50 and $2.65. The company expects interest expenses to be $180 million.