Perrigo Company plc PRGO reported adjusted earnings of 86 cents per share in the fourth quarter of 2023, beating the Zacks Consensus Estimate of 83 cents. Earnings were up 14.7% year over year. The upside can be attributed to lower operating expenses incurred by the company during the quarter.
Net sales increased 0.1% year over year to $1.16 billion, missing the Zacks Consensus Estimate of $1.19 billion. The upside was driven by growth stemming from the acquisition of the U.S. & Canadian Good Start infant formula brand and favorable currency movement, partially offset by a decline in organic net sales.
During the quarter, sales rose 1.4% on account of favorable currency movement. At constant currency (excluding foreign currency translation), sales fell 1.2%. Organic net sales (excluding the effects of acquisitions and divestitures and the impact of currency) were down 0.6% year over year.
Segment Discussion
Perrigo reports its results under the following segments — Consumer Self Care Americas (“CSCA”) and Consumer Self Care International (“CSCI”).
CSCA:The segment’s net sales in the third quarter of 2023 came in at $744.4 million, down 2.8% year over year. The downside was caused by purposeful SKU prioritization actions to enhance margins as part of the company's Supply Chain Reinvention Program undertaken in 2022 and lower net sales of Nutrition and Oral Care products in the United States.
CSCI:The segment reported net sales of $412.6 million, up 5.9% from the year-ago period’s levels. Segment revenues benefited from favorable currency movement and higher net sales of Pain & Sleep-Aids and VMS products. At constant-currency (cc) rates, sales were up 1.8% year over year. Organically, sales increased 2.9%.
Full-Year Results
Perrigo reported revenues of $4.66 billion, up 4.6% year over year. Net sales also rose 1.7% organically. The company reported adjusted earnings of $2.58 per share for 2023, up 24.6% year over year.
2024 Guidance
Perrigo issued fresh 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 Zacks Consensus Estimate for total revenues and earnings stand at $4.91 billion and $2.94 per share, respectively. Shares of Perrigo were down 10.4% in pre-market trading on Feb 27, likely due to the lower-than-expected financial outlook.
In the year so far, the stock has registered breakeven growth compared to the industry’s 4.7% rise.
The adjusted tax rate is expected to be around 20.5%. Perrigo expects to record interest expenses of about $180 million.
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Initiates New Restructuring Plan
Beginning from the first quarter of 2024, Perrigo has launched a three-year program called Project Energize. This program is expected to improve organizational agility and mitigate impacts from the company's plan to augment and improve its infant formula business.
An investment and efficiency program, Project Energize intends to cut costs and reinvest back into certain parts of the company’s business.
As part of the restructuring activities for the project, Perrigo expects to reduce nearly 6% of its existing workforce. By initiating this program, management expects to deliver annualized pre-tax savings of $140 million to $170 million by 2026. Out of these savings, Perrigo expects to reinvest $40 million to $60 million to expand its blended-brand business model.
The company expects to record restructuring charges of $140 million to $160 million, including $20 million to $40 million in investments, by the end of 2026.
Perrigo Company plc Price
Perrigo Company plc Price
Perrigo Company plc price | Perrigo Company plc Quote
Zacks Rank & Stocks to Consider
Perrigo currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the overall healthcare sector include Adicet Bio ACET, ADMA Biologics ADMA and Puma Biotechnology PBYI. While Puma Biotechnology sports a Zacks Rank #1 (Strong Buy) at present, Adicet and ADMA carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for ADMA Biologics’ 2024 EPShave risen from 18 cents to 22 cents. Year to date, shares of ADMA have risen 19.5%.
Earnings of ADMA Biologicsbeat estimates in three of the last four quarters while meeting the same on one occasion. ADMA delivered a four-quarter average earnings surprise of 63.57%.
In the past 60 days, estimates for Puma Biotechnology’s 2023 EPS have risen from 72 cents to 73 cents. Meanwhile, during the same period, EPS estimates for 2024 have improved from 64 cents to 71 cents. Year to date, shares of PBYI have rallied 49.7%.
Earnings of Puma Biotechnology beat estimates in three of the last four quarters while missing the same on one occasion. Puma delivered a four-quarter average earnings surprise of 76.55%.
In the past 60 days, estimates for Adicet Bio’s 2024 loss per share have improved from $2.11 to $1.81. Year to date, shares of ACET have rallied 28.0%.
Earnings of Adicet Bio beat estimates in two of the trailing four quarters while missing the mark on the other two occasions. On average, Adicet came up with a four-quarter negative earnings surprise of 8.36%.
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