Irish healthcare products company Perrigo (PRGO 89.90, +8.70 +10.7%) trades to near 12-month highs dating back to the middle of November of last year. The stock is reacting favorably to beating Q3 market expectations and raising its FY17 earnings guidance.
For those who may not be familiar, PRGO healthcare company whose main business surrounds its healthcare products, which are sold under the Quality Affordable Healthcare Products moniker. Also, PRGO manufacturers over-the-counter ("OTC") healthcare products and is a supplier of infant formulas for the store brand market. Further, the company is a provider of branded OTC products throughout Europe and the U.S., as well as a leading producer of "extended topical" prescription drugs.
Jumping to the results, PRGO beat Street expectations on both the top and bottom lines for Q3 – the company recorded Q3 earnings of $1.39 per share and revenues of $1.22 billion, down 2.0% year-over-year.
- Consumer Healthcare Americas’ Q3 net sales were $599 million compared to $611 million last year. Excluding $21 million from U.S. Vitamins, Minerals & Supplements in the prior year, adjusted net sales grew more than 1% on a constant currency basis. Management noted this increase was due to higher net sales in the gastrointestinal category along with higher net sales in the animal health and Mexico businesses compared to the prior year. New product sales of $13 million were led by the store brand version of Nexium, which launched late in Q3. These positive drivers were partially offset by lower sales primarily in the smoking cessation and contract categories and pricing pressure in certain OTC categories, along with discontinued products of $3 million.
- Consumer Healthcare International reported a net sales decline of 3% compared to the third quarter of 2016. Net sales grew about 5% excluding $42 million from the exited unprofitable European distribution businesses and favorable foreign currency movements of $12 million. This strength was due mostly to higher net sales in the cough, cold and allergy, analgesics, and lifestyle categories, in addition to new product sales of $11 million dollars. These increases were partially offset by lower net sales in the personal care and anti-parasite categories in addition to discontinued products of $3 million.
- And lastly, net sales in the Prescription Pharmaceuticals segment were $251 million, relatively in-line compared to last year. Excluding the $10 million year-over-year impact of Entocort, net sales grew 4% led by new product sales of $31 million. Sales of existing products were lower by $22 million, due primarily to price erosion.
As for the guidance, PRGO now expects FY17 EPS in the range of $4.80-4.95 (up from $4.45-4.70).Further, on the conference call management gave guidance for adjusted net sales of about $4.8-4.9 billion and adjusted operating income between $990 million to $1.01 billion.
Simply put, investors were pleased with the Q3 print and the stock is reacting accordingly. Thus far in 2017 shares hold gains of about 7% but action has picked up nicely in the past few months, recouping all of the early-2017 losses which saw the stock dip below $66.