PRGO

Perrigo ($PRGO) CEO and EVP Consecutive Buying Draws Attention, $100K+ Share Purchases Following Stock Plunge

08/19/2025 14:46

Perrigo ($PRGO) has captured investor attention with consecutive insider purchases by senior executives following the stock's sharp decline after disappointing Q2 earnings. This signals strong management confidence in the current share price levels and suggests potential medium-term investment opportunities. Perrigo is a Dublin-based global over-the-counter (OTC) pharmaceutical company manufacturing diverse healthcare products including allergy relief, nutritional supplements, digestive aids, pain relievers, and oral care products. Operating through Consumer Self-Care Americas and Consumer Self-Care International segments, the company distributes products globally through pharmacies, supermarkets, mass retailers, and online platforms, employing approximately 8,379 people. Key brands include Compeed, Mederma, Nasonex, and Prevacid24HR, with a market capitalization of $3.5 billion. The most notable development was the executive buying spree immediately following August's stock decline. On August 8, CEO Patrick Lockwood-taylor purchased 4,460 shares at $22.37 per share, investing $99,782. This was followed on August 18 by EVP Eduardo Bezerra's purchase of 3,000 shares at $22.74, adding $68,207 to his position. These consecutive insider purchases are particularly significant given they occurred as the stock traded in the low $23 range. These management moves came directly after disappointing Q2 results announced on August 6. Perrigo reported Q2 revenue of $1.06 billion, down 0.9% year-over-year and missing analyst consensus of $1.08 billion. EPS of $0.57 also fell short of the $0.59 consensus. However, adjusted operating income of $147 million exceeded consensus estimates of $133.6 million, and adjusted net income of $83 million surpassed expectations of $75.8 million. The revenue shortfall was attributed to divestitures and infant formula production variability. Consumer Self-Care Americas segment declined 1.9% to $622 million, while Consumer Self-Care International grew modestly by 0.7% to $434.3 million. The company cautioned that 2025 reported net sales growth may trend toward the lower end of guidance at 0-3%. Despite topline challenges, financial health indicators remain relatively robust. Cash holdings stand at $454 million with a current ratio of 2.32, indicating strong short-term liquidity. Levered free cash flow of $776 million annually demonstrates powerful cash generation capabilities despite net losses, supporting dividend payments and debt service. From a valuation perspective, Perrigo appears significantly undervalued. The forward P/E ratio stands at just 7.67x, while price-to-book and price-to-sales ratios of 0.71x and 0.73x respectively trade well below 1.0x. The dividend yield of approximately 5% offers attractive income potential. Analysts maintain an average price target of $27, suggesting 17% upside from current levels, with some targets reaching $40. Key risks include persistent revenue growth deceleration and continued Americas segment underperformance. The debt-to-equity ratio of 86.47% requires monitoring, while significant international exposure creates currency and geopolitical risks. However, the planned divestiture of the Dermacosmetics business for up to €327 million should enhance focus on core operations and improve profitability. Positive catalysts beyond management buying include operating income beating consensus, strong cash flow generation, and extremely attractive valuation metrics. The synchronized CEO and EVP purchases represent powerful signals of management confidence in long-term prospects. Warning signs to monitor include consecutive revenue declines, persistent Americas weakness, and potential guidance cuts. The November 5 Q3 earnings release will be crucial in addressing these concerns. Perrigo currently presents a situation where short-term earnings volatility must be weighed against medium-term value realization potential and restructuring benefits. The aggressive management buying strongly suggests current share prices significantly undervalue the company's intrinsic worth.