Perrigo Confronts New Securities Fraud Class Action Amid Ongoing Litigation Risks

What happened

Levi & Korsinsky filed a class action lawsuit against Perrigo, alleging securities fraud from February 27, 2023, to November 4, 2025, seeking to recover investor losses. This legal action adds to Perrigo's existing litigation exposure, which includes the generic pricing MDL highlighted in the DeepValue report as a key risk. The lawsuit introduces potential financial liabilities and management distractions during critical execution phases of cost-saving programs like Project Energize and Supply Chain Reinvention. While Perrigo's fundamental turnaround efforts—such as portfolio simplification and Opill growth—remain intact, the new legal overhang could pressure near-term investor sentiment and cash flows. Investors must now balance this heightened uncertainty against the company's low valuation and operational catalysts.

Implication

Investors should anticipate potential legal costs and settlements that could impact Perrigo's free cash flow, delaying deleveraging or capital allocation plans. Management may face distractions from executing key operational initiatives like cost savings and supply chain upgrades, risking milestone delays. Market sentiment could turn negative, leading to stock price volatility until the lawsuit's merits and financial implications are clarified. However, if Perrigo successfully defends or settles without material harm, the core investment thesis based on margin expansion and growth catalysts remains viable. A cautious approach is warranted, with close monitoring of litigation developments and their impact on the company's financial health and strategic execution.

Thesis delta

The DeepValue report's BUY thesis already accounts for litigation risk, but this new securities fraud lawsuit specifically escalates that risk, adding regulatory scrutiny and potential financial strain. While the fundamental drivers—cost savings from Project Energize and Supply Chain Reinvention, plus growth from Opill—are unchanged, the increased litigation overhang necessitates a more guarded stance until the lawsuit's scope and impact are assessed. If adverse outcomes materialize, it could trigger a downgrade as per the report's thesis invalidation triggers.