Date: 08/09/2023
Author: Mr. X
In yesterday’s article, I said that we would need to keep tabs on Perrigo Company PLC [PRGO], as earnings were about to drop. Well, they have, and there’s a lot to talk about. PRGO was up more than 8.5% during the trading day.
Quarterly earnings were for $0.63 per share, compared to estimates of just $0.54 per share, and topping results of $0.43 per share one year ago. Revenue slightly topped estimates at $1.19 billion instead of the expected $1.18 billion. Net sales were also above estimates. PRGO is up about 12% over the last six months.
Perrigo made headlines in July when the FDA approved its Opill as the first over-the-counter contraceptive, making it available without a prescription. It should be available in early 2024. The FDA justified the move by saying it would do more to remove barriers, including making birth control available to younger women. It’s about 93% effective.
The market for over-the-counter birth control was about $216 million in 2011 and an astonishing $664 million in 2022 (according to figures provided by Fool.com). Those figures are likely to increase. It seems reasonable that PRGO will be able to capture a large part of this market.
The stock has been up for four consecutive days, though it fell in after-hours trading.
The company has also announced a quarterly dividend of $0.273 per share.
Net sales were up 8.1% (9.7% on a constant currency basis) compared to the same time period in 2022. Organic net sales were up 3.5%.
However, a closer look shows some sectors suffered even as others gained. Pain and sleep aids lost more than 5%, upper respiratory drugs lost even more due to “lower net sales of allergy products driven by a weaker allergy season compared to the prior year” (even as cough and cold drugs sold more), and healthy lifestyle drugs were flat. Oral care, digestive health, and women’s health markets increased, while vitamin sales decreased.
Opill will be key to the company’s growth prospects going forward. For now, consider holding, as it seems reasonable another wave of positive earned media as well as increased sales in 2024 will drive the stock to match its 52-week high of over $43. However, it may be prudent to sell around that point, even at about $44 or $45, as it may not climb much higher if it meets increased competition in this market.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing
