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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 by divesting its Rx segment earlier this month, on the second-quarter 2021 earnings call.

Perrigo’s earnings performance has been mixed over the trailing four quarters. The company’s earnings beat estimates in two of the last four quarters and missed the same twice, delivering an average surprise of 2.62%.

Shares of Perrigo have gained 5.3% so far this year compared with the industry’s increase of 3.5%.

In the last reported quarter, Perrigo delivered a negative earnings surprise of 10.71%.

Zacks Investment Research
Image Source: Zacks Investment Research

Factors at Play

In the second 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. However, the company stated on its first-quarter earnings call that the incidence of cough and colds had  started trending up. It remains to be seen if there was any recovery in sales of cough and cold products during the second quarter.

The impact of COVID-19 has been mixed for products other than cough and cold. During the second 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 second-quarter results remains to be seen amid rising fear of a new wave of coronavirus infection.

Loss of sales from the recall of albuterol sulfate inhalation aerosol, discontinued products and exited business, 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.

The company is in discussion with the Irish Revenue department related to potential settlement of nearly $1.6 billion tax assessment. Investors are likely to look forward to updates on the  probable timeline for resolution of the tax assessment on the second-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: Perrigo has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 61 cents per share. 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.

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.

Ironwood Pharmaceuticals (IRWD - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #2.

Nektar Therapeutics (NKTR - Free Report) has an Earnings ESP of +1.73% and a Zacks Rank of 3.