PRGO - Perrigo: Undervalued Transformation Deserves A Closer Look

• In its journey to become a consumer-led player, Perrigo has already achieved its long-term sales targets well ahead of the schedule.
• Partly helped by pandemic-driven changes to consumer habits, the highly profitable consumer business is boosting its contribution to the top-line.
• Yet, the company continues to trade at a sharp discount to the sector leaders as rising leverage and falling free cashflows threaten the dividend safety.
• However, the investment-grade credit ratings and improving operating cashflows alleviate the liquidity concerns.
• Along with consensus earnings, even a partial lift to forward PE in line with historicals indicate a premium, unveiling a long-term ‘Buy’ as the pandemic turbocharges the consumer-driven growth.

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