Perrigo shares slide as drugmaker slashes full-year forecast again
Company sales have halved since the company rejected Mylan takeover offer late last year
A truck is parked at the loading dock at the Perrigo facility in Allegan, Michigan. Photograph: Adam Bird/Bloomberg
Perrigo, the Irish domiciled over-the-counter drug specialist, slashed its full-year earnings forecast for the second time, citing pricing pressure in its generic drugs business.
The announcement sent its shares down as much as 13 per cent, wiping out about $1.77 billion of market value.
Perrigo’s shares have halved since shareholders rejected a $26 billion hostile bid from Dutch-domiciled Mylan in November, raising concerns about the drugmaker’s future as a standalone company.
Dublin-based Perrigo, which also reported a lower-than-expected quarterly profit for the second time in three quarters, said on Wednesday it had lower performance expectations for its branded consumer drugs business as it reorganises.
Chief executive John Hendrickson has been working to stabilise Perrigo since he took over in May from long-time CEO Joseph Papa, who left to lead troubled Canadian drugmaker Valeant Pharmaceuticals International.
Perrigo’s announcement in May that it was cutting its forecast unleashed scepticism about Mr Papa’s tenure at the company. The latest forecast revision showed that things are not yet on the mend, said Wells Fargo analyst David Maris.
“We were surprised by the magnitude of the guidance revision, given management’s prior conviction in the business,” Mr Maris wrote in a client note.
Perrigo, with its large portfolio of consumer products, infant formulas and over-the-counter generic topical drugs, has long been seen as a potential takeover target.
The company, which had a market capitalisation of $13.62 billion as of Tuesday’s close, said it now expected adjusted earnings of $6.85-$7.15 per share for the year, down from its earlier estimate of $8.20-$8.60.
Perrigo shares were down 10 per cent at $85.18 in afternoon trading after falling as much as 13 per cent to touch a five-year low of $82.50.
Up to Tuesday’s close, Perrigo’s stock had fallen 34 per cent this year, making it the second-worst performing share in the S&P 500 healthcare index in percentage terms. – Reuters