Analyst Note| Dylan Finley, CFA |
Due to the earlier-than-expected close of the HRA Pharma deal, Perrigo raised its top- and bottom-line guidance estimates for 2022. As the deal is accretive to the company's operating margin, the result of closing two months prior to both management's (and our own) expectations results in a $0.35 boon to EPS for fiscal year 2022. These tailwinds were partially offset by higher-than-anticipated operating costs and disruption in the company's sales in Eastern Europe. The market reacted positively to the news; however, we are maintaining our fair value estimate of $47.50 as we do not see any of the short-term changes to be material to our long-term growth and margin assumptions. Our long-term thesis also remains steady for the no-moat company. Even with the combination of HRA's assets, we do not see any branded products in the company's portfolio that possess substantial enough brand equity to command pricing power in the market. Regarding current operations, the company's first-quarter results were within our expectations, and we do not anticipate any change to organic growth for the year.