Why Is Perrigo (PRGO) Down 15.1% Since Last Earnings Report?

Core Viewpoint - Perrigo's recent earnings report shows a decline in both earnings and net sales, raising concerns about its future performance as the stock has underperformed the S&P 500 by approximately 15.1% in the past month [1]. Financial Performance - Adjusted earnings for Q1 2024 were reported at 29 cents per share, surpassing the Zacks Consensus Estimate of 24 cents, but reflecting a year-over-year decline of 35.6% due to a negative impact of 30 cents per share related to the infant formula business [2]. - Net sales fell 8.4% year over year to $1.08 billion, missing the Zacks Consensus Estimate of $1.09 billion, primarily due to lower sales in infant formula and SKU prioritization actions aimed at enhancing margins [2]. - Sales declined 1.2% due to exited product lines and 0.3% from unfavorable currency movements; at constant currency, sales decreased by 8.2%, with organic net sales down 7.0% year over year [3]. Segment Analysis - The CSCA segment reported net sales of $644.1 million, down 15.7% year over year, attributed to inventory de-stocking at U.S. retail customers [4]. - The CSCI segment saw net sales of $437.9 million, an increase of 4.7% from the previous year, driven by growth in Skin Care and Women's Health categories, strategic pricing, and new products; at constant currency, sales increased by 5.5% [4]. Guidance and Estimates - Perrigo maintained its 2024 financial guidance, expecting total net sales growth to be flat year over year, with adjusted EPS projected between $2.50 and $2.65 and an adjusted tax rate around 20.5% [5]. - There has been a downward trend in estimates, with the consensus estimate shifting down by 5.95% over the past month [5]. VGM Scores and Outlook - Perrigo has a subpar Growth Score of D, but a better Momentum Score of B, with an overall aggregate VGM Score of B, indicating a favorable position in the value investment strategy [6]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting an expectation of an in-line return in the coming months [7]. Industry Comparison - In comparison, SurModics, a peer in the Zacks Medical - Products industry, has seen a significant gain of 32.9% over the past month, reporting revenues of $31.96 million, a year-over-year increase of 17.5% [8].