Options Trade – Perrigo Company plc (NYSE:PRGO) Calls 
Wednesday, September 03, 2014

**OPTIONS TRADE: Buy the PRGO Feb 2015 160.000 call (PRGO150220C00160000) at or under $7.00, good for the day. Place a protective stop limit at $2.80 and a pre-determined sell at $14.00.

by Ian Harvey

September 03, 2014


Perrigo Company plc Ordinary Shares (NYSE: PRGO), a global healthcare supplier that develops, manufactures and distributes over-the-counter and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, animal health, dietary supplements, active pharmaceutical ingredients (API), and medical diagnostic products, and Multiple Sclerosis drug Tysabri, experienced a backlash from Wall Street that saw its stock plummet to lows of $130 in May.

In 2013, PRGO acquired the Irish drug maker Elan, and used the purchase to shift their tax base to Ireland. Two quarters ago, PRGO got slammed by a late, light U.S. flu season. But this year, forecasters are calling for a cold and wet winter, so that limit is probably out the door. And PRGO’s most recent quarter showed dramatic improvements.

However, little of this improvement has shown up in share price yet, which is great for future price growth.

Perrigo Company is on a bullish move to rally back to its all-time high at the back of the private level store business where the company remains the number one player with an impressive market share. Price discounts remain the main play for Perrigo seen by its Nicorette product label retailing at $52.27, a discount of 26% compared to CVS Caremark Corporation (NYSE:CVS)’s $71.59 for the same product.

The big pharmacies chains love Perrigo products which will see Perrigo shares to enjoy improved sales attributed to the fact that the stigma of being seen with expensive branded products is fading away as consumers continue to be conscious about their shopping patterns. Perrigo market share in the health-care segment rose to 35% in 2013, up from 10% in 1990 attributed to cost-effective products.

As more prescription drugs continue to gain approval from the FDA to be sold’ over the counter, so will Perrigo continue to enjoy increased sales with its private-label products. Perrigo’s generic drug business and nutritional products continue to perform well at the back of 75 new products that are set to be launched’ this year alone.

Technical Details

The stock has a 50-day moving average of $149.9 and a 200-day moving average of $148.7. The company has a market cap of $19.904 billion and a P/E ratio of 84.03.


Perrigo Company last posted its quarterly earnings results on Thursday, August 14th. The company reported $1.74 earnings per share for the quarter, beating the analysts’ consensus estimate of $1.55 by $0.19. The company had revenue of $1.14 billion for the quarter, compared to the consensus estimate of $1.09 billion. Analysts expect that Perrigo Company PLC will post $7.39 EPS for the current fiscal year.

The company also recently announced a quarterly dividend, which is scheduled for Tuesday, September 16th. Shareholders of record on Friday, August 29th will be paid a dividend of $0.105 per share. This represents a $0.42 annualized dividend and a dividend yield of 0.28%. The ex-dividend date is Wednesday, August 27th.

Analysts Opinions

Analysts at Zacks reiterated a “neutral” rating on shares of Perrigo Company PLC in a research note on Monday, August 18th. They now have a $156.00 price target on the stock.

The company has been the subject of a number of research reports:-

• Analysts at B. Riley upgraded shares of Perrigo Company PLC from a “neutral” rating to a “buy” rating in a research note on Friday, August 15th. They now have a $180.00 price target on the stock, up previously from $157.00.

• Seperately, analysts at Jefferies Group raised their price target on shares of Perrigo Company PLC from $160.00 to $176.00 in a research note on Friday, August 15th. They now have a “buy” rating on the stock.

Three research analysts have rated the stock with a hold rating, eight have issued a buy rating and one has given a strong buy rating to the company. The company presently has an average rating of “Buy” and a consensus target price of $166.92.


Over the past 30 months, PRGO’s long-term trend has bent upwards into an accelerating curve. Price just rebounded after cycling to the trend’s bottom quartile for the ninth time. The typical follow-on gain from this position has been 21.84%. If PRGO follows suit again, it should double its recent gains and rise back toward the all-time high before capping out around $167.15.

Therefore, based on the facts above the following options trade is recommended…..

**OPTIONS TRADE: Buy the PRGO Feb 2015 160.000 call (PRGO150220C00160000) at or under $7.00, good for the day. Place a protective stop limit at $2.80 and a pre-determined sell at $14.00.

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