On November 6, 2023, Canaccord Genuity adjusted its price target for Perrigo Company plc (NYSE:PRGO) from $40 to $20, while maintaining a Buy rating on the stock. Despite beating expectations in its third-quarter results, Perrigo’s sales fell short due to weaker than anticipated performance in over-the-counter (OTC) products and a decline in nutrition sales. These factors were compounded by last year’s strong sales, which benefited from retailers stocking up during a port strike.
For the third quarter of 2023, Perrigo reported revenues of $1.04 billion, reflecting a decrease of 4.06% compared to the same period last year. The company’s operating income was $73 million, down from $80 million the previous year. Patrick Lockwood-Taylor, President and CEO of Perrigo, highlighted that while OTC consumption was soft during the quarter, the company achieved strong in-market performance. Perrigo gained market share in five of seven store-brand categories and expanded its share in key brands, indicating that consumers continue to choose Perrigo products.
Strategic Review of Infant Formula Business
In a related development, on November 5, Perrigo announced a strategic review of its infant formula division, indicating a shift towards higher-margin branded products. The company, known for supplying store-brand baby formula at lower prices, has faced challenges related to quality issues at its manufacturing facilities, which raised contamination risks. This strategic pivot is aimed at enhancing profitability while addressing these quality concerns.
Perrigo Company plc has a longstanding history in the consumer health sector, boasting over a century of experience in delivering quality health and wellness solutions, primarily in North America and Europe. While Canaccord acknowledges the potential of Perrigo as an investment, they maintain that other sectors, particularly artificial intelligence stocks, may offer more significant opportunities for returns with reduced downside risk.
Investors interested in dividend stocks may want to consider Perrigo, which has been included among the 15 Best 52-Week Low Dividend Stocks to Invest in. The evolving landscape of consumer health and wellness continues to present both challenges and opportunities for companies like Perrigo as they adapt to market trends and consumer preferences.
