Perrigo Earnings: Tepid Performance but Strong Infant Formula Growth Drives Positive Outlook

No-moat Perrigo reported third-quarter results that were largely in line with our expectations. The firm reported total sales of $1.1 billion, a 3.2% decline year over year, primarily due to the loss of distribution for lower-margin products in US store brands and weaker demand in the upper respiratory and oral care categories. In light of these results, management guided to the lower end of the previously expected sales growth range of negative 5%-negative 3%, while maintaining its adjusted EPS outlook. After making modest adjustments to our near-term forecast, we are maintaining our fair value estimate of $35 per share.