Pharma Stock Hits Annual High, Reclaims Key Trendline

Jefferies upgraded PRGO to "buy" from "hold"

Assistant Editor
Sep 30, 2021 at 10:26 AM
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Perrigo Company PLC (NYSE:PRGO) stock is soaring today, up 12.5% to trade at $48.95 at last check, after news that the American Irish-registered pharmaceutical company settled a dispute with Irish tax officials for significantly less than previously stated, with no interest or penalties applied. In response, Jefferies upgraded PRGO to "buy" from "hold," with a price-target hike to $63 from $45, stating "when combined with the recently announced acquisition of HRA Pharma, we are now meaningfully more optimistic about PRGO's outlook."
 
Today's bull gap had Perrigo stock surging to a fresh annual high of $50.89 out of the gate, jumping past pressure at the $49 level that kept a lid breakout attempts the last two months. With today's gains, PRGO has now reclaimed its year-to-date breakeven level. 
 
Perrigo stock's typically quiet options pits are seeing a lot more activity this morning, with 762 calls and 775 puts across the tape so far -- 11 times the intraday average and pacing for the 99th percentile of its annual range volume-wise. Most popular is the October 50 call, followed by the October 45 put, with new positions being opened at both.
 
These options look well-priced at the moment, too. The stock's Schaeffer's Volatility Index (SVI) of 27% stands higher than 13% of all other readings in its annual range, implying that options players are pricing in low volatility expectations. It's also worth pointing out that PRGO ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just 18 out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.

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