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Is a Beat in the Cards for Perrigo (PRGO) in Q4 Earnings?

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We expect Perrigo Company plc (PRGO - Free Report) to beat estimates when it reports fourth-quarter 2017 and full-year results before the opening bell on Feb 27.

Perrigo has an average beat of 20.64%. Last quarter, the company delivered a positive surprise of 26.36%.

Shares of the company have lost 2.8% in a year’s time against the industry’s rally of 13.9%.

 

Let’s see, how things are shaping up at the company this quarter.

Factors Influencing This Quarter

Perrigo’s product acquisitions and launches in the Prescription Pharmaceuticals (Rx) segment are expected to boost sales in the coming quarters.

The company’s over-the-counter version of AstraZeneca’s (AZN - Free Report) heart burn drug, Nexium, generated nominal sales in third-quarter 2017 after it was launched right at the end of the period. However, we expect a significant sales draw from the drug in fourth-quarter release.

Moreover, in September 2017, the company announced the FDA approvals for Exalgo’s generic version to manage moderate to severe pain in opioid tolerant patients and the same of Acanya for topical treatment of acne vulgaris. These product introductions and agency nods are likely to drive sales in the to-be-reported quarter.

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

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

Additionally, the Branded Consumer Healthcare (BCH) business, part of Consumer Health Care International segment, is still being impacted by unfavorable market dynamics in countries like Belgium, France, Germany and Italy. This BCH segment is projected to persist its weak performance in the yet-to-be-reported quarter on lower-than-expected revenues from certain high-margin products.

Earnings Whispers

Our proven model shows that Perrigo is likely to beat on earnings this quarter because it has the right combination of the two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Zacks ESP: Perrigo has an Earnings ESP of +2.10%. This is because the Most Accurate estimate is pegged at $1.27 per share, higher than the Zacks Consensus Estimate of $1.24. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Perrigo has a Zacks Rank #3, which increases the predictive power of ESP. Further, combined with a positive ESP, the stock has a significantly higher chance of beating estimates.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

 

Stocks That Warrant a Look

Here are a couple of health care stocks with the right combination of elements to beat on earnings this time around:

Gemphire Therapeutics is expected to release fourth quarter 2017 results on Mar 21. The company has an Earnings ESP of +6.62% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Puma Biotechnology, Inc. (PBYI - Free Report) is slated to release fourth-quarter financial numbers on Mar 1. The company has an Earnings ESP of +2.02% and a Zacks Rank of 3.

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