Perrigo has done well over the last few years on the back of reasonably good fundamental performance. There was an article on SA which was a bit negative on the stock mainly due to recent insider selling. The author also pointed out that the insiders have not made any purchases since quite some time. Though this does indicate lack of a overtly bullish stance by the management, considering the size of the float (93 million), the low proportion of insider ownership (less than 2%), and amount sold by insiders in 2013 (177K), this alone cannot be a strong enough reason for being negative on the stock. Further, insider selling is not always associated with negative outlook of the management towards the company's prospects. On the other hand, insider purchases are usually associated with positive outlook of the management. A recent case has been OPKO Health (OPK) and Biozone Pharmaceuticals (BZNE) where purchases / support by insiders have led to a lot of positive momentum. The valuations of Perrigo were also cited as a reason for being negative on the stock. However, the ttm P/E is around 28 and the forward P/E is 16 (fye June 29, 2015). The difference indicates expectations of growth in EPS and even the PEG of 1.42 is not very high. The price to sales of 3.51 is also not too high if one factors the net margins of 12%, though comparatively it may be a bit on the higher side. Management expects 13% to 18% EPS growth in fiscal 2014. The acquisition of Elan is expected to be EPS accretive to extent of 10 cents per share in fiscal 2014 and 70 to 80 cents per share in fiscal 2015. The stock is trading around the 52 week high, so there is not much hint of weakness yet. Even the author wanted a technical confirmation before going short on the stock.
