) is scheduled to report fourth quarter fiscal 2013 earnings
before the opening bell on Aug 15, 2013.The company's fiscal year
ends on the last Saturday of Jun every year.
Last quarter, Perrigo reported earnings of $1.42 per share,
missing the Zacks Consensus Estimate by $0.02 per share. However,
we expect the company to beat expectations in the final quarter
of fiscal 2013.
Why a Likely Positive Surprise?
Our proven model shows that Perrigo is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP
: The Expected Surprise Prediction or ESP (Read:
Zacks ESP: A Better Way to Find Earnings
), which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +0.64%. This is
meaningful and a leading indicator of a likely positive earnings
surprise for the shares.
Zacks Rank #3 (Hold)
: Note that stocks with a Zacks Rank #1, #2 and #3 have a
significantly higher chance of beating earnings estimates. We
caution against stocks with Zacks Ranks #4 and #5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revision momentum.
The combination of Perrigo's Zacks Rank #3 and an ESP of
+0.64% makes us confident of an earnings beat on Aug 15.
Factors at Play
The company has delivered positive earnings surprises in three
of the last four quarters with an average beat of 1.61%. We
expect the Rx Pharmaceuticals (generic) segment at Perrigo to
continue performing well. The addition of nine generic
prescription drugs resulting from Perrigo's purchase of Fera's
ophthalmic product portfolio in Jun 2013 has further strengthened
the Rx Pharmaceuticals segment. Newly launched products are also
expected to perform well in the final quarter of fiscal 2013.
Growth-by-acquisition strategy is Encouraging
Perrigo has lately been quite active on the acquisition front.
In Jun 2013, Perrigo acquired the eye-care portfolio of
privately-held Fera Pharmaceuticals for approximately $93 million
in cash. On Apr 1, 2013, the company announced that it has
completed the acquisition of companion animal health company,
Velcera, Inc., for approximately $160 million in cash.
In Feb 2013, the company acquired UK-based Rosemont
Pharmaceuticals Ltd. By acquiring Rosemont Pharma, Perrigo has
strengthened its position in the UK oral liquid formulations
Last month, Perrigo inked a definitive agreement to acquire
) for approximately $8.6 billion in a bid to boost its revenue
stream and save taxes.
The cash and stock deal, cleared by the boards 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.
Another Stock to Consider
Apart from Perrigo,
) is expected to beat earnings. The company carries a Zacks Rank
#1 (Strong Buy) and has an ESP of +4.35%.
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