Perrigo (PRGO): Discounted Valuation Challenges Bearish Turnaround Narratives Despite Ongoing Losses

Perrigo (PRGO) remained unprofitable, with annual losses accelerating by 15.2% per year over the past five years. Despite the ongoing red ink, the company is forecast to turn profitable within three years, fueled by projected annual earnings growth of 6.54%. With shares trading at $15.10, well below a fair value estimate of $95.72 and sporting a price-to-sales ratio markedly lower than both industry and peer averages, many investors are eyeing PRGO as a turnaround value opportunity. However, the slower 2.1% revenue growth and the sustainability of its dividend are important risks to watch.

See our full analysis for Perrigo.

Next, we’ll dig in and see how these latest numbers align with the main narratives in focus for Perrigo. This will help clarify which stories are sticking and which might need a fresh look.

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Unit Share Gains in US OTC

• Perrigo reports net new contract wins in US store-brand over-the-counter (OTC) products, with $75 million in incremental sales expected in the second half.
• Analysts' consensus view suggests that these wins, combined with consumer trends toward private label products, are strengthening Perrigo’s core business and setting the stage for sustainable top-line growth.
  • Ongoing portfolio simplification is helping the company focus on higher-growth categories, reinforcing its position amid industry shifts.
  • The structural move toward cost-conscious consumer choices is broadening Perrigo's addressable market, even as category growth in some regions slows.
• Intrigued by how these industry shifts impact Perrigo’s long-term story? Unpack more in the full consensus breakdown. 📊 Read the full Perrigo Consensus Narrative.

Profit Margins Set to Turn Positive

• Perrigo’s profit margin, at -1.4% today, is forecast to reach 4.0% in three years, marking a notable turnaround from ongoing annual losses of 15.2% growth per year.
• Analysts' consensus narrative points out that operational improvement initiatives, such as over $150 million in cost savings from supply chain reinvention and “Project Energize,” are driving the anticipated margin recovery.
  • Actions like the sale of the Dermacosmetics business and targeted investment in core OTC and nutrition brands are expected to accelerate both gross margin growth and financial deleveraging.
  • However, rising competition and persistent cost inflation may limit Perrigo’s ability to fully translate these efficiency gains into stable, long-term margins.

Valuation Stands Out Versus Peers

• At a price-to-sales ratio of 0.5x, Perrigo trades well below the US pharmaceutical industry average of 4.2x and direct peer average of 12.1x, with shares at $15.10 compared to DCF fair value of $95.72.
• Analysts' consensus view notes this deep valuation discount attracts value investors, but the gap can only close if Perrigo delivers on earnings turnaround and improves its future price/earnings (PE) multiple to the forecast 32.9x by 2028.
  • With revenue growth projections lagging the broader US market average (2.1% vs. 10.5%), the stock’s cheap price may persist unless revenue acceleration and operational execution match expectations.
  • The analyst price target of $27.50 implies 82% upside, yet achieving it depends on both profit margin recovery and stronger demand momentum in core categories.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Perrigo on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Perrigo research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Perrigo’s revenue growth is lagging industry averages, and profit margin recovery remains uncertain. Future returns may be at risk if execution falls short.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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