Perrigo’s Strategic Divestiture Prompts Buy Rating from Analyst Susan Anderson

In a report released yesterday, Susan Anderson from Canaccord Genuity maintained a Buy rating on Perrigo Company (PRGO – Research Report), with a price target of $42.00.

Susan Anderson has given her Buy rating due to a combination of factors related to Perrigo Company’s strategic positioning and financial prospects. She commends Perrigo’s recent move to divest its rare disease pharmaceutical portfolio, which aligns with the company’s ongoing transition towards a self-care focused entity. This divestiture not only streamlines Perrigo’s operations but also provides a significant cash inflow, enabling the company to aggressively reduce its debt levels. Anderson highlights that the transaction is expected to be accretive to Perrigo’s current enterprise value to EBITDA multiple, underlining its financial attractiveness.

Furthermore, Anderson finds the sale to be a pivotal step in Perrigo’s commitment to reaching a leverage ratio of 4x or lower by the end of the fiscal year 2024. The deal, set to close in the third quarter of 2024, involves a substantial upfront cash payment with the potential for additional earnout payments, contingent on achieving specific sales milestones. This could result in financial benefits that exceed management’s initial expectations, offering a substantial cash boost to Perrigo. Such strategic and financial maneuvering underpins Anderson’s optimistic outlook on Perrigo’s stock, justifying her Buy rating.

Based on the recent corporate insider activity of 43 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of PRGO in relation to earlier this year.

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Perrigo Company (PRGO) Company Description:

Perrigo Co. Plc is a healthcare company, which engages in the production of over-the-counter consumer goods and specialty pharmaceutical products. It operates through the following segments: Consumer Healthcare Americas, Consumer Healthcare International, and Prescription Pharmaceuticals. The Consumer Healthcare Americas segment comprises the U.S., Mexico and Canada consumer healthcare business. The Consumer Healthcare International segment includes branded consumer healthcare business primarily in Europe and consumer focused businesses in the U.K., Australia, and Israel. The Prescription Pharmaceuticals refers to the U.S. prescription pharmaceuticals business. The company was founded by Luther Perrigo in 1887 and is headquartered in Dublin, Ireland.