On Thursday, Piper Sandler exhibited a continued optimistic stance on Perrigo Company (NYSE:PRGO) shares, albeit with a reduced price target. The firm has lowered its price target on NYSE:PRGO to $36.00, down from the previous figure of $39.00. Despite this adjustment, the analyst has maintained an Overweight rating on the stock.
The decision to adjust the price target comes in the wake of challenges facing the infant formula market. According to Piper Sandler, the recent decline in Perrigo's share price, which has more than doubled the estimate reduction since the escalation of infant formula issues, presents an attractive entry point for investors. The firm believes that the market's reaction to Perrigo's challenges has been excessive.
The analyst from Piper Sandler pointed out that the anticipated earnings per share (EPS) downside risk from potential scenarios around the recovery of the infant formula market is minimal. This assessment is based on the firm's calculations and suggests that the current share weakness may be an overreaction.
Furthermore, Piper Sandler has chosen not to make significant adjustments to its model for Perrigo for the year 2026. The firm indicates that while the current outlook does not warrant material changes to their forecasts, there could be a more meaningful upside potential for the company in the longer term.
In summary, Piper Sandler's analysis suggests that despite the recent market challenges related to infant formula, Perrigo's financial outlook remains strong, and the current share price could offer a beneficial buying opportunity for investors. The firm's maintained Overweight rating reflects confidence in the company's potential for growth and recovery.
In other recent news, Perrigo Company plc has disclosed a decline in its first-quarter financial results for 2024, with both net sales and earnings per share (EPS) showing a decrease compared to the previous year. The company's financial performance was influenced by strategic actions in its infant formula business and SKU prioritization within its Consumer Self-Care Americas (CSCA) segment. Despite these hurdles, Perrigo continues to adhere to its operational priorities, including margin expansion and the One Perrigo strategy aimed at simplifying and scaling its business.
Net sales fell by over 8%, with organic net sales down by 7%, and the gross margin dropped by 90 basis points to 36.5%. The company's EPS for the first quarter was $0.29, marking a decrease of $0.16 from the previous year. However, Perrigo has launched Opill, an oral contraceptive, and is focusing on innovation to lead category growth.
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