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Perrigo Company (PRGO)
NYSE:PRGO
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Perrigo Company
(NYSE:PRGO)
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Rating:50Neutral
Price Target:
$9.50
▼(-2.26% Downside)
Action:ReiteratedDate:02/27/26
The score is held back primarily by weak financial performance (declining revenue and a severe 2025 loss) and a technically bearish price trend. Offsetting factors include improved balance-sheet leverage, continued positive cash generation, a high dividend yield, and earnings-call initiatives targeting cost savings and a second-half 2026 recovery—tempered by cautious guidance and potential further impairments.
Positive Factors
Low leverage / stronger balance sheet
Very low debt (debt-to-equity ~0.01) materially reduces financial risk and increases capacity to fund restructuring, innovation, or dividends without relying on new borrowing. This structural improvement gives management optionality during the multi-quarter recovery cycle.
Positive cash generation
Sustained positive operating and free cash flow—even after a 2025 decline—provides durable funding for operations, working-capital needs, and capex. Cash generation cushions earnings volatility, supports deleveraging and dividends, and funds the operational enhancement program.
Structural operational gains
One-time and recurring benefits from Project Energize and supply-chain reinvention ($320M realized) reflect sustainable cost and productivity improvements. Combined with share gains and a larger innovation pipeline, these initiatives can structurally raise margins and competitive cost position over the medium term.
Negative Factors
Earnings deterioration / declining revenue
A multi-year revenue decline and a severe 2025 operating loss undermine recurring profitability and earnings quality. Persistent top-line weakness constrains reinvestment, compresses returns on equity, and forces cost reduction that can limit growth capacity for several quarters.
Large goodwill impairments
Massive goodwill write-downs signal that prior acquisition assumptions deteriorated and reduce shareholders' equity. These noncash hits constrain future capital-allocation credibility, may presage further impairments, and reflect weaker long-term cash-flow expectations for key businesses.
Structural market / product headwinds
Sharp declines in Infant Formula and softer OTC consumption are persistent category headwinds. Reduced demand drives inventory builds, working-capital strain and plant underabsorption (≈$0.60 EPS headwind), prolonging margin pressure and slowing a durable recovery in core sales.
Perrigo Company (PRGO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.28B
Dividend Yield8.48%
Average Volume (3M)3.30M
Price to Earnings (P/E)―
Beta (1Y)0.64
Revenue Growth-2.55%
EPS Growth66.00%
CountryUS
Employees8,379
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)0.77
Shares Outstanding137,649,350
10 Day Avg. Volume4,687,780
30 Day Avg. Volume3,296,098
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)0.66
Price to Sales (P/S)0.45
P/FCF Ratio13.29
Enterprise Value/Market Cap3.73
Enterprise Value/Revenue1.12
Enterprise Value/Gross Profit3.20
Enterprise Value/Ebitda-5.77
Forecast
1Y Price Target
$42.50Price Target Upside337.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)2.28
Revenue Forecast (FY)$4.13B
Perrigo Company Business Overview & Revenue Model
Company DescriptionPerrigo Company plc provides over-the-counter (OTC) health and wellness solutions that enhance individual well-being by empowering consumers to prevent or treat conditions that can be self-managed. The company operates through two segments, Consumer Self-Care Americas and Consumer Self-Care International. The Consumer Self-Care Americas segment focuses primarily on the development, manufacture, marketing, and sale of store brand, self-care products in categories, including upper respiratory, pain and sleep-aids, digestive health, nutrition, vitamins, minerals and supplements, healthy lifestyle, skincare and personal hygiene, and oral self-care in the United States, Mexico, Canada, and South America. The segment offers its products under the Prevacid 24HR, Good Sense, Zephrex D, ScarAway, Plackers, Rembrandt, Steripod, Firefly, REACH, Dr. Fresh, and Burt's Bees brand names. The Consumer Self-Care International segment develops, manufactures, markets, and distributes consumer self-care brands through a network of pharmacies, wholesalers, drug and grocery store retailers, and para-pharmacies in approximately 23 countries, primarily in Europe. The company also offers contract manufacturing services. Perrigo Company plc was founded in 1887 and is headquartered in Dublin, Ireland.
How the Company Makes MoneyPerrigo makes money primarily by selling consumer self-care products to retailers, pharmacies, wholesalers, and distributors. A key revenue stream is private-label OTC products, where Perrigo formulates and manufactures store-brand equivalents that retailers sell under their own brands; Perrigo earns revenue from these supply agreements based on shipped product volumes and negotiated pricing. Perrigo also generates revenue from branded consumer health products, selling items under its owned brands through similar channels; branded sales typically depend on consumer demand, retail shelf placement, marketing support, and pricing/mix. In addition, Perrigo earns revenue from contract manufacturing and related services for certain products where it produces on behalf of other companies (details on specific arrangements: null). Geographic diversification contributes to earnings, with revenue generated from both North American and European markets, and results can be influenced by factors such as product mix (private label vs. branded), competitive pricing in OTC categories, retailer purchasing patterns, regulatory/compliance requirements for OTC and consumer health products, and input-cost and supply-chain conditions.
Perrigo Company Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Neutral
The call presented a mix of meaningful operational progress and clear near-term headwinds. Positive execution items include share gains, $320M of realized operational benefits, a tripled innovation pipeline, margin expansion over recent years, and a targeted operational savings program. Offsetting these are substantial legacy and cyclical challenges: a large $1.3B goodwill impairment (with potential additional charges), significant Infant Formula revenue declines and inventory/working capital pressure, market softness in OTC (notably cough/cold), and a near-term EPS hit (~$0.60) from underabsorption. Management frames 2026 as a transition year with confidence in a second-half recovery and 2027 improvement, but the near-term guidance and noncash impairments temper the outlook.Q4-2025 Updates
Positive Updates
Full-Year CORE and All-In EPS & Operating Income Improvement
Full year All-In operating income grew 2% and All-In EPS improved 7%, finishing at $2.75. CORE Perrigo operating income increased 7% year-over-year and CORE EPS rose 14% versus prior year (CORE 2025 baseline EPS $2.52).
Project Energize and Supply Chain Benefits
Operational initiatives (Project Energize and supply chain reinvention) delivered approximately $320 million in benefits in 2025, driving improvements in operating income and EPS.
Share Gains and New Distribution Wins
Company reported accelerating market share gains across key categories and regions, securing over $100 million in new distribution and competitive takeaways and strengthened in-store execution.
Innovation Pipeline Expansion
Management stated the innovation pipeline tripled in value versus the prior year, with a large portion of new product value and geographic expansion planned to land in the second half of 2026 (~60%+ of innovation/opportunistic expansion).
CORE 2026 Guidance and Margin Targets
2026 CORE guidance: organic net sales growth of -3.5% to +0.5%; CORE EPS guidance $2.25 to $2.55; CORE gross margin expected 39%–40% and CORE operating margin 15%–16%.
Operational Enhancement Program
New 2-year operational enhancement program expected to deliver annualized pretax savings of $80 million to $100 million (approximately 80% of savings expected in 2026), with estimated one-time costs of $80 million to $90 million and a planned ~7% global workforce reduction.
Supply Stabilization in Infant Formula
Company reported stabilizing supply in Infant Formula with service levels recovered above 90%, even as demand recovery softened and competition increased.
Cash, Leverage and Margin Progress
Ended 2025 with $532 million cash, full-year operating cash flow $239 million (Q4 operating CF $175 million). Net leverage improved from ~5.5x to 4.0x and operating income margin expanded ~230 basis points over the past 2.5 years.
Regulatory and Quality Execution
Operations reported strong compliance with 30+ inspections in 2025 with no critical or major observations and no recalls, highlighting quality assurance strength.
Negative Updates
Infant Formula Revenue Declines and Dilutive Impact
All-In net sales declines in Infant Formula of roughly 25% in the quarter and ~10% for the full year; fourth quarter All-In operating income declined $29 million, including a negative $21 million impact from Infant Formula. Management expects Infant Formula to remain a headwind and is under strategic review.
Significant Goodwill Impairment Charges
2025 GAAP results include a noncash goodwill impairment charge of $1.3 billion. Company may record additional noncash goodwill impairment charges of up to $350 million in Q1 2026 due to redistribution to new reporting units.
Near-Term Market Weakness in OTC
U.S. OTC market consumption weakened: sales down 5.1% over the last 13 weeks vs. year-ago (compared with a 4.3% decline in Q4 and a 1.2% decline for full year 2025). Management expects continued negative consumption in the first half of 2026, driven by a soft cough/cold season.
CORE Q4 Organic Sales and EPS Pressure
CORE organic net sales declined 2% in Q4 despite share gains; CORE operating income declined $4 million (2%) in the quarter resulting in CORE EPS of $0.76 (down $0.02).
Underabsorption and One-Time EPS Headwind
Temporary plant underabsorption from lower 2025 volumes is expected to create an unfavorable EPS impact to CORE Perrigo of approximately $0.60 in 2026.
All-In 2026 Sales and EPS Guidance Reflect Weakness
All-In 2026 outlook (including Infant Formula and assuming Dermacosmetics divestiture) calls for net sales decline of -5.5% to -1.5% and All-In EPS of $2.00 to $2.30, indicating material near-term pressure compared with 2025 results.
Working Capital Built in Infant Formula and Cash Pressure
Higher inventory levels built in 2025 for Infant Formula (due to anticipated demand and import dynamics) created elevated working capital needs; management expects inventory drawdown in 2026 but flagged a challenging year for free cash flow conversion.
Workforce Reduction and Restructuring Costs
Planned global workforce reduction of approximately 7% and restructuring/one-time costs of $80 million to $90 million to achieve operational savings represent short-term execution and human capital challenges.
Company Guidance
Management's 2026 guidance for CORE Perrigo calls for organic net sales of -3.5% to +0.5%, CORE EPS of $2.25–$2.55 (versus a 2025 CORE baseline of $2.52), CORE gross margin of 39–40% and CORE operating margin of 15–16%, with a temporary under‑absorption EPS headwind of ~ $0.60 and CORE EPS phasing ~30–35% in H1 and ~65–70% in H2; on an All‑In basis (assuming Dermacosmetics divestiture in Q2) they expect net sales -5.5% to -1.5%, gross margin 36.5–37.5%, operating margin 12.5–13.5% and EPS $2.00–$2.30. To offset headwinds they are launching a 2‑year operational enhancement program (≈7% workforce reduction) targeting annualized pretax savings of $80–$100M (≈80% realized in 2026) with implementation costs of $80–$90M; operating cash‑flow conversion is expected in the mid‑60% range and net leverage to finish 2026 roughly in line with or slightly better than 2025 (4.0x at year‑end 2025). They also flagged potential additional Q1 2026 goodwill impairments up to $350M (after a $1.3B 2025 impairment) and reminded investors Project Energize/supply‑chain initiatives delivered about $320M of benefits in 2025.Perrigo Company Financial Statement Overview
Summary
Income statement trends are weak (declining revenue and a severe 2025 loss), partially offset by improved leverage (very low debt-to-equity) and still-positive operating/free cash flow despite a sharp 2025 FCF decline.Income Statement
Revenue has been drifting lower over time (down ~6% in 2024 and ~3% in 2025), and profitability deteriorated sharply in 2025 with a large operating loss and a deeply negative net margin (about -34%) despite a fairly steady gross margin (~35%). Prior years showed modest operating profitability (2021–2024) but net income was generally negative, indicating recurring below-the-line pressure and limited earnings quality. Overall, the income statement profile is weak due to the 2025 step-down in profitability and lack of consistent net earnings.24
Negative
Balance Sheet
Leverage improved dramatically in 2025, with total debt falling to a very low level versus equity (debt-to-equity ~0.01), which reduces financial risk. However, equity also declined versus prior years, and returns on equity are meaningfully negative, culminating in a very large negative return in 2025—consistent with the major loss that year. Net: balance sheet risk looks lower from a debt standpoint, but the earnings-driven hit to shareholder returns keeps this in the middle of the pack.55
Neutral
Cash Flow
Cash generation remains positive (operating cash flow and free cash flow both positive in 2023–2025), which is a key support during an earnings downturn. That said, free cash flow fell materially in 2025 (down ~47%), and operating cash flow is modest relative to the company’s reported profits/losses, signaling uneven cash conversion. Overall, cash flow is a relative bright spot versus earnings, but the recent decline in free cash flow and only moderate operating cash flow strength limit the score.46
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.25B | 4.37B | 4.66B | 4.45B | 4.14B |
| Gross Profit | 1.49B | 1.54B | 1.68B | 1.46B | 1.42B |
| EBITDA | -797.90M | 433.00M | 525.00M | 355.50M | 695.90M |
| Net Income | -1.43B | -171.80M | -12.70M | -140.60M | -68.90M |
Balance Sheet | |||||
| Total Assets | 8.54B | 9.65B | 10.81B | 11.02B | 10.43B |
| Cash, Cash Equivalents and Short-Term Investments | 531.60M | 558.80M | 751.30M | 600.70M | 1.86B |
| Total Debt | 3.97B | 3.62B | 4.07B | 4.32B | 3.69B |
| Total Liabilities | 5.60B | 5.33B | 6.04B | 6.18B | 5.27B |
| Stockholders Equity | 2.94B | 4.32B | 4.77B | 4.84B | 5.15B |
Cash Flow | |||||
| Free Cash Flow | 145.10M | 244.60M | 303.80M | 210.90M | 4.20M |
| Operating Cash Flow | 238.50M | 362.90M | 405.50M | 307.30M | 156.30M |
| Investing Cash Flow | -75.40M | 78.80M | -77.50M | -1.96B | 1.28B |
| Financing Cash Flow | -220.50M | -611.00M | -187.20M | 421.60M | -178.70M |
Perrigo Company Technical Analysis
Negative
9.72
Price Trends
13.48
Negative
14.17
Negative
18.76
Negative
Market Momentum
-1.20
Positive
16.90
Positive
3.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRGO, the sentiment is Negative. The current price of 9.72 is below the 20-day moving average (MA) of 12.37, below the 50-day MA of 13.48, and below the 200-day MA of 18.76, indicating a bearish trend. The MACD of -1.20 indicates Positive momentum. The RSI at 16.90 is Positive, neither overbought nor oversold. The STOCH value of 3.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PRGO.
Perrigo Company Risk Analysis
Perrigo Company disclosed 46 risk factors in its most recent earnings report. Perrigo Company reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Perrigo Company Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $33.94B | 25.43 | 20.09% | ― | -0.25% | ― | |
60 Neutral | $2.89B | -72.78 | -0.01% | ― | 4.54% | -130.59% | |
56 Neutral | $15.56B | -4.15 | -22.99% | 3.99% | -6.40% | -320.23% | |
54 Neutral | $3.87B | 21.36 | -98.94% | ― | -0.25% | ― | |
54 Neutral | $3.76B | 54.80 | -67.91% | ― | 9.50% | ― | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
50 Neutral | $1.28B | ― | -35.16% | 8.48% | -2.55% | 66.00% |
* Healthcare Sector Average
PRGO
Perrigo Company
9.72
-16.72
-63.23%
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INDV
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AMRX
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.