Value
9.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 7.2 |
| Fwd P/E | 10.0 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 4.7x
- ▸PEG: 0.04
- ▸Attractively valued
PRGO · Why this verdict
Why Perrigo Company (PRGO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue declined by 7% year-over-year and the quality score is only 3.0 out of 10 with no competitive moat identified, a return on assets of only 1.4%, and no free cash flow margin, indicating that the core business is losing competitive ground in the generic over-the-counter pharmaceutical market. Growth breakdown | Revenue growth turns positive in at least 1 of the next 2 reported annual periods, signaling stabilization of the business. | →Stable |
| CounterGeneric pharmaceutical companies can cycle through periods of pricing pressure and product mix shifts; a favorable regulatory ruling on a new product approval could reverse the revenue trend quickly. | ||
Perrigo trades at a forward price-to-earnings of only 4.5 times with a PEG ratio of 0.04, an almost unprecedented discount to earnings growth, and analysts collectively see 54% upside to the consensus target of $14.03 from the current price of $10.70. Valuation breakdown | The stock appreciates by more than 25% toward the analyst consensus target within 12 months as the valuation gap narrows. | →Stable |
| CounterA PEG ratio of 0.04 and forward PE of 4.5 times may reflect genuine business deterioration risk; extremely cheap multiples in declining revenue businesses often signal value trap dynamics rather than undervaluation. | ||
The death cross is confirmed with the 200-day moving average declining at negative 11.9% per 30 days, one of the steepest downtrend slopes in this sector, and falling on-balance volume confirms that institutional selling has been sustained and consistent. Momentum breakdown | The 200-day moving average slope improves to above negative 5% per 30 days within 4 months, indicating that the rate of decline is at least slowing. | →Stable |
| CounterAn RSI of 52 and an improving MACD within a death cross setup can signal that the selling is exhausted; the death cross is a lagging indicator that may not predict additional significant downside. | ||
Short interest of 17% of float is flagged as justified by the data, meaning the skeptical market positioning appears supported by fundamentals rather than representing a contrarian buying opportunity at this stage. Risk breakdown | Short interest falls below 10% of float over the next 6 months, signaling that the bear thesis has lost conviction. | →Stable |
| CounterJustified short interest can also create a powerful reversal catalyst; if Perrigo resolves a legal overhang or announces a material asset sale, a short squeeze could amplify gains significantly. | ||
Revenue declined by 7% year-over-year and the quality score is only 3.0 out of 10 with no competitive moat identified, a return on assets of only 1.4%, and no free cash flow margin, indicating that the core business is losing competitive ground in the generic over-the-counter pharmaceutical market.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive in at least 1 of the next 2 reported annual periods, signaling stabilization of the business.
CounterGeneric pharmaceutical companies can cycle through periods of pricing pressure and product mix shifts; a favorable regulatory ruling on a new product approval could reverse the revenue trend quickly.
Perrigo trades at a forward price-to-earnings of only 4.5 times with a PEG ratio of 0.04, an almost unprecedented discount to earnings growth, and analysts collectively see 54% upside to the consensus target of $14.03 from the current price of $10.70.
→StableValuation breakdown
- Expectation
- The stock appreciates by more than 25% toward the analyst consensus target within 12 months as the valuation gap narrows.
CounterA PEG ratio of 0.04 and forward PE of 4.5 times may reflect genuine business deterioration risk; extremely cheap multiples in declining revenue businesses often signal value trap dynamics rather than undervaluation.
The death cross is confirmed with the 200-day moving average declining at negative 11.9% per 30 days, one of the steepest downtrend slopes in this sector, and falling on-balance volume confirms that institutional selling has been sustained and consistent.
→StableMomentum breakdown
- Expectation
- The 200-day moving average slope improves to above negative 5% per 30 days within 4 months, indicating that the rate of decline is at least slowing.
CounterAn RSI of 52 and an improving MACD within a death cross setup can signal that the selling is exhausted; the death cross is a lagging indicator that may not predict additional significant downside.
Short interest of 17% of float is flagged as justified by the data, meaning the skeptical market positioning appears supported by fundamentals rather than representing a contrarian buying opportunity at this stage.
→StableRisk breakdown
- Expectation
- Short interest falls below 10% of float over the next 6 months, signaling that the bear thesis has lost conviction.
CounterJustified short interest can also create a powerful reversal catalyst; if Perrigo resolves a legal overhang or announces a material asset sale, a short squeeze could amplify gains significantly.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Perrigo is a deeply discounted generic drug manufacturer trading at a forward price-to-earnings of 4.5 times and a PEG of 0.04, with analysts seeing 54% upside to target, but the company is in a confirmed death cross with declining revenue of negative 7%, no competitive moat identified, and quality scoring only 3.0 out of 10, making it a value trap candidate that must demonstrate earnings stabilization to justify the valuation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 1.4 |
| Gross margin | 2.8 |
| Op margin | 1.4 |
| Net margin | 0.0 |
| Current ratio | 9.2 |
| Moat | 2.5 |
| Piotroski F | 6.7 |
- ▸No competitive moat
- ▸Quality concerns
Growth
5.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.7 |
| EPS growth | 10.0 |
- ▸Declining revenue: -7%
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 8.3 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.3 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -11.1%/30d — confirmed downtrend
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.5 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 49%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.1 |
| quality rank | 0.5 |
| growth rank | 1.9 |
Technical
2.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.5 |
| support resistance | 3.4 |
| 52w position | 0.0 |
Risk (lower is worse)
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.5 |
| days to cover | 4.8 |
| volatility | 0.7 |
| put call | 0.0 |
| implied vol | 0.0 |
| beta | 9.9 |
| debt equity | 3.9 |
- ▸High short interest justified: 20%
- ▸Elevated put/call: 3.00
- ▸High IV: 82%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 7.3 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 1053.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:5.8>=5.5
- ASYMMETRY:1.8>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:26d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- DEATH_CROSS:momentum=5.8>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.76
Upside
+26.5%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 51
EdgeInst Constrain — Small cap ($1.5B) below institutional reach
SuitabilitySpeculative — Drawdown -58% (>40% off 52w high)
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 9.2 could not lift the engine output above the verdict floor.
The strongest dimensions are Value at 9.2, Sentiment at 6.5, and Momentum at 5.8; the weakest are Technical at 2.0, Peer rank at 2.9, and Risk (lower is worse) at 3.0. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 1.76 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Extreme Discount Valuation
Trip ifThe stock price falls below $8 at any point over the next 12 months, indicating the value thesis is breaking down rather than recovering.
- P2Revenue Decline Quality Concerns
Trip ifRevenue declines by more than 10% year-over-year in any reported annual period, indicating the business deterioration is accelerating.
- P3Death Cross Confirmed Downtrend
Trip ifThe 200-day moving average slope remains below negative 10% per 30 days for more than 3 consecutive months.
- P4High Short Interest Justified Bearish View
Trip ifShort interest rises above 22% of float at any point over the next 6 months.