We have reiterated our Neutral recommendation on
) with a target price of $113.00. The stock carries a Zacks #3
Rank (Hold) in the short run.
Maintaining Neutral Stance
Perrigo delivered mixed numbers in the first quarter of fiscal
2013 (ended September 29, 2012). Though revenues were short of
the Zacks Consensus Estimate, earnings were ahead of the Zacks
Consensus Estimate. The company expects fiscal 2013 earnings to
grow in the range of 9-13% over fiscal 2012 levels.
We are impressed by Perrigo's growth-by-acquisition strategy.
The company is constantly making acquisitions to expand its
business and drive growth. In December 2012, Perrigo acquired
privately-held Cobrek Pharmaceuticals, Inc. for approximately $45
million in cash. In January 2012, Perrigo inked a deal to acquire
the assets of Georgia-based private company CanAm Care, thereby
expanding its presence in the diabetes care market.
In July 2011, Perrigo acquired Paddock Labs to expand its
generic Rx business. In April 2010, Perrigo acquired PBM
Holdings, Inc., a leading manufacturer and distributor of store
brand infant formulas, pediatric nutritional and baby food. Other
important acquisitions include Galpharm, Diba and Orion
Laboratories. Such prudent acquisitions should drive growth at
Perrigo in the coming quarters.
We are also impressed by the series of launches at the generic
(Rx Pharmaceuticals) segment of Perrigo. Though encouraged by
Perrigo's strong position in the brand over the counter
pharmaceutical market and growing generics and Active
Pharmaceutical Ingredientsbusinesses, we remain concerned about
the uninspiring performance by the Consumer HealthCaresegment,
which accounts for the majority of the company's revenues.
Other Stocks to Consider
We prefer to remain on the sidelines on Perrigo, an S&P
500 stock. S&P companies that currently look
), which carries a Zacks #2 Rank (Buy).
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PERRIGO COMPANY (PRGO): Free Stock Analysis
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