) first-quarter fiscal 2014 (ended Sep 28, 2013) earnings of
$1.52 per share breezed past the Zacks Consensus Estimate by 12
cents. The company reported earnings of $1.27 per share in the
prior-year quarter. The year-over-year rise in earnings was due
to higher revenues.
Net sales in the quarter climbed 21.3% to $933.4 million.
Revenues increased $64 million due to the inclusion of results of
Sergeant's Pet Care Products, Inc. (assets acquired by Perrigo in
Oct 2012), Rosemont Pharma (acquired by Perrigo in Feb 2013),
Velcera (acquired in Apr 2013) and Fera's ophthalmic product
portfolio (acquired in Jun 2013). Newly launched products boosted
revenues by $54 million. Revenues beat the Zacks Consensus
Estimate of $903 million. The strong results in the first quarter
of fiscal 2014 impacted the shares positively.
The First Quarter in Detail
Perrigo reports revenue primarily from the following segments:
Consumer HealthCare (CHC), Nutritionals, Rx Pharmaceuticals and
Active Pharmaceutical Ingredients (API).
Consumer Healthcare: Perrigo reported CHC revenue of $538 million
in the quarter, up 20% from the prior year. Net sales growth was
driven by improved sales of existing products primarily in the
analgesics and cough/cold categories units, along with strong new
product sales, mainly in the cough/cold and smoking cessation
Sales in the segment were also aided by results from Sergeant's
Pet Care Products and Velcera. Adjusted gross margin for the
segment climbed to 33.5% from 32.6% a year ago.
Nutritional: Perrigo reported revenue of $129 million, up 25%
year over year. All the sub-groups of the segment witnessed
growth during the reported quarter. Adjusted gross margin for the
segment declined to 26.3% in the first quarter of fiscal 2014
from 27.9% a year ago. The decline was due to unfavorable product
mix and higher cost of production.
Rx Pharmaceuticals: The Rx Pharmaceuticals segment performed
encouragingly during the quarter with net sales improving 25% to
$204 million. Sales of new products boosted segmental revenues by
$15 million. Inclusion of results of Rosemont Pharma and Fera's
ophthalmic product portfolio boosted sales by $23 million.
Adjusted gross margin for the segment increased to 63.1% from
58.4% a year ago.
Active Pharmaceutical Ingredients: The company reported API sales
of $43 million, up 18% from the prior-year quarter. Results were
aided by strong sales of new products.
Others accounted for the remaining revenues.
Fiscal 2014 View Maintained
Perrigo continues to expect earnings per share (on an adjusted
basis) for fiscal 2014 in the range of $6.35 and $6.60, up
13%-18% over fiscal 2013 levels. The Zacks Consensus Estimate
currently stands at $6.53 per share for fiscal 2014.
Perrigo stated in its press release that it expects its impending
) to boost fiscal 2014 earnings (standalone) by 10 cents per
share and fiscal 2015 earnings by 70-80 cents per share inclusive
We are impressed by the performance of Perrigo in the first
quarter of fiscal 2014. The company reported higher-than-expected
earnings as well as revenues during the quarter. Perrigo's strong
product portfolio and impressive pipeline encourage us.
We are also impressed by Perrigo's growth by acquisition
strategy. We expect investor focus to remain on Perrigo's
impending acquisition of Elan. The cash and stock deal ($8.6
billion), cleared by the board of directors of both the
companies, is expected to close by the end of calendar year 2013.
On completion of the deal, Perrigo's revenue stream would be
boosted as it will receive significant royalties on multiple
sclerosis drug Tysabri from
Biogen Idec Inc.
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Perrigo currently carries a Zacks Rank #3 (Hold). Right now,
) looks attractive, with a Zacks Rank #1 (Strong Buy).