NEW YORK (TheStreet) -- Perrigo (PRGO) - Get Perrigo Co. Plc Report stock closed lower by 4.22% to $148.38 in Monday's trading session, after agreeing to pay $380 million to acquire U.S. drug rights from AstraZeneca (AZN).
Under the terms of the deal, Perrigo will purchase capsules of the gastroenterology medicine Entocort as well as the authorized generic capsules marketed by Par Pharmaceuticals within the U.S.
Entocort sales in the U.S. totaled $89 million during the first nine months of this year, Reuters reports.
The transaction is expected to close by the end of this year and to be accretive by more than 35 cents per share to Perrigo's fiscal 2016 adjusted earnings.
"Strategically, Entocort fits well within our growing Rx portfolio and serves as yet another example of our ability to execute on our 'Base Plus Plus Plus' strategy," Perrigo CEO Joseph Papa said. "We are excited to add this margin-enhancing asset to our already robust Rx portfolio and remain committed to pursuing accretive transactions, such as this one, to continue delivering superior value for our shareholders."
Perrigo is a pharmaceutical company based in Dublin.
Separately, TheStreet Ratings team rates PERRIGO CO PLC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate PERRIGO CO PLC (PRGO) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.7%. Since the same quarter one year prior, revenues rose by 41.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
- PERRIGO CO PLC has improved earnings per share by 6.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PERRIGO CO PLC reported lower earnings of $0.94 versus $1.65 in the prior year. This year, the market expects an improvement in earnings ($7.75 versus $0.94).
- Net operating cash flow has decreased to $136.00 million or 30.29% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market, PERRIGO CO PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: PRGO
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.