Perrigo Company ( PRGO ) is set to report first-quarter fiscal 2015 results on Nov 6 before the market opens. Last quarter, the company had delivered a positive earnings surprise of 12.26%. Let's see how things are shaping up for this announcement.
Factors at Play This Quarter
Perrigo's Consumer HealthCare and Rx Pharmaceuticals segments should continue performing well in the first quarter of fiscal 2015 though seasonality factors could lead to a slowdown in Consumer HealthCare.
Net sales and EPS are expected to be lowest in the first quarter and highest in the fourth quarter due to seasonality. Perrigo plans to launch further line extension flea and tick products later in fiscal 2015.
Meanwhile, first quarter fiscal 2015 adjusted net income year-over-year growth is expected to be towards the lower end of the full fiscal year guidance range of 31% to 37%. EPS is expected to decline from the year-ago period due to a higher share count.
Our proven model does not conclusively show that Perrigo is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Perrigo is -1.38% since the Most Accurate estimate is $1.43 while the Zacks Consensus Estimate is $1.45.
Zacks Rank: Perrigo's Zacks Rank #2 (Buy) when combined with a negative ESP makes surprise prediction difficult.
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 revisions.
Stocks to Consider
Here are some companies in the broader health care sector you may want to consider as our model shows that they have the right combination of elements -- a positive Zacks Earnings ESP and a Zacks Rank #1, 2 or 3 -- to post an earnings beat this quarter.
Actavis ( ACT ) has an earnings ESP of +0.32% and carries a Zacks Rank #2. It is expected to report third-quarter results on Nov 5.
Alnylam Pharmaceuticals, Inc. ( ALNY ) has an earnings ESP of +9.23% and carries a Zacks Rank #2. It is scheduled to report third-quarter results on Nov 5.
Medivation, Inc. ( MDVN ) has an earnings ESP of +7.34% and carries a Zacks Rank #1 (Strong Buy). It is expected to report third-quarter results on Nov 6.
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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.