What's in the Cards for Perrigo (PRGO) This Earnings Season?

Perrigo Company plcPRGO is expected to report second-quarter 2018 results before the opening bell on Aug 9.

Perrigo's earnings history has been quite impressive with the company surpassing expectations in all the last four quarters, delivering an average beat of 17.14%. In the last reported quarter, the company delivered a positive surprise of 10.53%.

Shares of the company have lost 9.3% so far this year against the industry 's increase of 10.6%.

Let's see how things are shaping up for the upcoming announcement.

Factors Likely to Influence Results

Perrigo's product acquisitions and launches in the Prescription Pharmaceuticals (Rx) segment are expected to boost sales in the to-be-reported quarter.

The company's over-the-counter version of AstraZeneca's AZN heart burn drug Nexium was launched last September. The same generated significant sales in first-quarter 2018. We expect to see the same positive trend in second-quarter release as well.

In April 2018, the company launched generic version of Bausch & Lomb's Prolensa to treat postoperative inflammation and reduction of ocular pain in patients having undergone cataract surgery. Additionally in January, Perrigo received FDA nod for the generic version of Galderma Laboratories' Epiduo to enable topical treatment of acne vulgaris in patients, aged nine years and above. These product introductions are likely to drive sales in the to-be-reported quarter.

Also, the ongoing restructuring initiatives and operating expense discipline are anticipated to cushion the company's bottom line.

However, price erosion and changing market dynamics amid a tough drug pricing environment might continue to hurt the Perrigo's Rx segment's performance.

The new products in the Consumer Healthcare Americas ("CHA") business and Consumer Health Care ("CHC") International segment have improved sales in the first quarter. We expect this to continue in the soon to-be reported quarter. However, currency movement is expected to unfavorably impact the sales of the CHC segment.

Earnings Whispers

Our proven model does not conclusively show that Perrigo is likely to beat estimates this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate estimate ($1.15) and the Zacks Consensus Estimate ($1.21), is -4.95%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Although Perrigo's Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident of an earnings surprise.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Perrigo Company plc Price and EPS Surprise

Perrigo Company plc Price and EPS Surprise | Perrigo Company plc Quote

Stocks to Consider

Here are a couple of health care stocks with the right combination of elements to surpass estimates this time around:

BioDelivery Sciences BDSI has an Earnings ESP of +8.6% and is a Zacks #2 Ranked player. The company is scheduled to release second-quarter results on Aug 9. You can see the complete list of today's Zacks #1 Rank stocks here .

SCYNEXIS, Inc. SCYX has an Earnings ESP of +4.76% and a Zacks Rank of 3. The company is expected to release second-quarter results on Aug 14.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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