Berenberg analyst Patrick Trucchio downgraded Perrigo to Hold from Buy and cut his price target for the shares to $72 from $100. The shares closed yesterday up $1.51 to $65.58. Although the key reason to own Perrigo shares remains intact, namely the U.S. government's push to shift more products from prescription to nonprescription, "too much uncertainty in generics has placed us on the sidelines," Trucchio tells investors in a research note. Secular challenges in U.S. generics, including increased competition and reduced pricing driven by greater efficiencies at FDA and buyer consolidation, are unlikely to ease, says the analyst. He says Perrigo is not as immune to secular challenges in U.S. generics as he once believed. Further, the company's supply chain issues and poor execution are adding to these challenges, Trucchio contends.

Perrigo announced that pharmaceutical company Esteve Healthcare has signed a binding offer to acquire Perrigo's HRA Pharma Rare Diseases business for a total consideration of up to EUR 275M, consisting of an upfront cash payment of EUR 190M and up to EUR 85M in potential earnout payments based on the Rare Diseases business achieving certain sales milestones. Following the information and consultation process with HRA Pharma Works Council in France, Perrigo would be able to exercise the put option granted by Esteve and enter into a definitive agreement with Esteve for the sale of the Rare Diseases business. The proposed final transaction is expected to close during the third quarter of 2024, subject to the satisfaction of the HRA Works Council consultation and customary closing conditions, including receipt of regulatory approvals.