NEW YORK (TheStreet) -- Perrigo (PRGO - Get Report) stock is slumping by 0.16% to $99.17 in pre-market trading on Tuesday after Jefferies downgraded shares to "hold" from "buy" given the company's guidance reduction on Monday.
Before Monday's market open, Perrigo announced that CEO Joseph Papa had resigned to take the top spot at rival Valeant Pharmaceuticals (VRX). The company also reduced its full-year earnings outlook, citing Rx pricing headwinds and a possible impairment charge within its branded consumer healthcare business, previously known as Omega Pharma.
"We're surprised on both fronts as management indicated as recently as Feb 18 that its Rx business wasn't facing pricing issues and that the issues at Omega had been fully characterized," Jefferies wrote in a note this morning.
The firm called Perrigo's Omega acquisition "unequivocally disastrous."
As for CEO Papa's departure, "time will tell if this is a positive move," Jefferies stated.
The firm views Papa's resignation as neutral, since his successor John Hendrickson's "operational expertise and insider knowledge make his appointment a smart choice." Still, Hendrickson is a "relative unknown among the investment community" and has not been CEO previously.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
Perrigo's strengths such as its robust revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures are countered by weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
You can view the full analysis from the report here: PRGO
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.