PRGO - Perrigo raised to Buy at Argus; expects momentum to continue amid self-care focus

Argus Research upgraded OTC product maker Perrigo Company plc ( NYSE: PRGO ) to Buy from Hold, noting that the momentum PRGO saw in Q2, thanks to its focus on consumer self-care, could continue despite macro headwinds.

While the company has faced the impact of industry-wide pricing pressures and a lack of FDA approvals for generic products in recent months, the analyst Kristina Ruggeri cites a turnaround following a restructuring initiative focused on consumer self-care.

Ruggeri points to the sale of PRGO's generic pharma business and acquisition of consumer self-care company HRA Pharma which, she says, has lifted the company's Q2 margins amid price hikes and recovery in cough/cold portfolio.

Despite ongoing pressure from cost inflation, adverse forex rates, and labor constraints, Q2 momentum at PRGO is expected to continue with the potential for growth in margins and earnings later this year as price hikes introduced at HRA Pharma benefit quarterly results, Ruggeri added.

The analyst who issues a $46 per share target for PRGO also sees a favorable impact for the company as customers shift to private label and store brands from national brands amid macro pressures.

Finally, Argus highlighted a potential growth opportunity from an OTC version of PRGO's prescription-only birth control pill Opill, which is currently under FDA review.

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