Perrigo's Voluntary Recall Sends Stock Sliding

The news sent PRGO down past former support at the $48 level

Deputy Editor
Sep 17, 2020 at 9:09 AM
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The shares of Perrigo Company PLC (NYSE:PRGO) are off 3.7% at $47.98 this morning, after the Irish pharmaceutical company voluntarily recalled its albuterol sulfate inhalation aerosol to the retail level. The recall is due to complaints over possible clogging in some units. The company predicted a third-quarter charge of roughly $18 to $22 million as a result, but restated its full-year forecast. 

It's been a volatile run for PRGO, which has attempted two solid runs at its pre-pandemic levels since March -- one in June and another in July. Since this second run-up sputtered out just below the $59 level, the stock has been slumping back down the charts, pushed lower by overhead pressure at the 30-day moving average. Plus, PRGO is looking to open just below the $48 mark, which acted as a floor just last week. 

The majority of analysts covering PRGO are skeptical, too. Just three call the equity a "buy" or better, while six say "hold." On the other hand, the 12-month consensus price target of $58.25 is a 16.9% premium to last night's close, which could usher in a round of price-target cuts, should this negative price action continue. 

An unwinding of optimism in the options pits could push Perrigo stock lower, too. In fact, the equity sports an extreme 50-day call/put volume ratio of 32.68 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all other readings from the past year. This suggests option traders haven't been more put-heavy in the last year. 


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