Perrigo (PRGO:US) Co. fell to the lowest since June in Tel Aviv, narrowing its premium to dually listed shares in New York, after the maker of over-the-counter medicines reported revenue that missed analysts’ estimates.
Shares of Allegan, Michigan-based Perrigo declined 2.8 percent to 430.1 shekels, the lowest since June 25, or $120.48, at the close in Tel Aviv. The New York-listed shares tumbled 6.5 percent to $120 last week. Israel’s TA-25 Index added 0.2 percent today.
Perrigo, which entered Tel Aviv’s benchmark after buying B’nei Brak, Israel-based Agis Industries Ltd. in 2005, reported sales that missed estimates by 3.2 percent. The selloff has cut the stock’s valuation (PRGO:US) to 18.4 times estimated earnings, the cheapest since June and below the implied two-year historic average of 32.5 times, according to data compiled by Bloomberg.
“The consumer health revenue has been an ongoing challenge,” Randal Stanicky, an analyst at Canaccord Genuity Inc., who rates the shares buy, said by phone from New York Aug. 16. “We think there’s upside, but given some investor skepticism, you could see the stock take a pause here.”
Perrigo slumped for six consecutive days in New York, trimming this year’s rally to 15 percent. The share has advanced 12 percent in Tel Aviv this year. While analysts (PRGO:US) see the stock climbing by an average 15 percent in the next 12 months, earnings estimates (PRGO:US) for the current quarter were cut by about 6 percent since Aug. 11, data compiled by Bloomberg show.
While “we still don’t feel great” about the results, specifically consumer health revenue, lowered expectations should help the stock, Stanicky wrote in an Aug. 16 note to clients. The division made up 57 percent (PRGO:US) of its revenue in 2012.
The company said July 29 it agreed to buy Irish drug maker Elan Corp. for $8.6 billion. The purchase allows Perrigo to move its domicile to Ireland, gaining a low-tax base for international expansion.
The deal “puts the company in a very interesting position to expand its presence internationally,” Ami Fadia, an analyst at UBS AG, who rates Perrigo buy, said by phone from New York on Aug. 16. “I do see it as a buying opportunity.”
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