Value
7.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 6.7 |
| Fwd P/E | 9.8 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 6.7x
- ▸PEG: 0.06
- ▸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. How we score · Editorial policy
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
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.
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. | ↓Deteriorating |
| 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.
↓DeterioratingMomentum 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.
Per-dimension breakdown
Quality
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 1.3 |
| Gross margin | 2.7 |
| Op margin | 1.5 |
| Net margin | 0.0 |
| Current ratio | 8.0 |
| Moat | 2.5 |
| Piotroski F | 6.7 |
- ▸No competitive moat
- ▸Quality concerns
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.7 |
| EPS growth | 10.0 |
- ▸Declining revenue: -3%
Momentum
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 3.2 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 1.5 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 5.0 |
| Price target | 5.5 |
Insider
6.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.4 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.8 |
| quality rank | 0.2 |
| growth rank | 0.8 |
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 3.0 |
| 52w position | 5.0 |
Risk (lower is worse)
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.8 |
| days to cover | 2.1 |
| volatility | 2.2 |
| put call | 10.0 |
| implied vol | 1.7 |
| beta | 8.9 |
| debt equity | 4.2 |
- ▸High short interest justified: 27%
- ▸High IV: 70%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.8 |
| news activity | 6.0 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 5 days
- ▸Dividend: 7.3%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (3)
- INSIDER:OK
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.9<4.5
- ASYMMETRY:-0.9=NEGATIVE
- EARNINGS_PROXIMITY:5d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.94
Upside
-11.9%
Downside
12.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.2B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 3.9<4.5 outcome against Value at 7.9 and asymmetric R:R of -0.94.
The strongest dimensions are Value at 7.9, Catalyst at 6.4, and Insider at 6.1; the weakest are Peer rank at 2.8, Quality at 2.8, and Technical at 3.9. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.94 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.