Perrigo Faces New Securities Fraud Lawsuit Amid Strategic Turnaround

What happened

The Schall Law Firm has announced a class action lawsuit against Perrigo for alleged securities fraud violations from February 27 to November 4, 2025. This legal action emerges as Perrigo is deep into executing Project Energize and Supply Chain Reinvention, multiyear cost-savings programs central to its 'One Perrigo' strategy. The DeepValue report already cites litigation exposure, including a generic pricing MDL, as a key risk that could trigger a downgrade if adverse outcomes arise. The new lawsuit likely targets disclosures or financial reporting during a period of significant restructuring and portfolio changes, adding to management's challenges. Investors must now critically assess whether this legal overhang will hinder Perrigo's ability to deliver on its promised savings and growth catalysts.

Implication

In the near term, Perrigo may incur higher legal costs and management distraction, potentially slowing progress on critical cost-savings initiatives like Project Energize. Financially, any settlements or judgments could strain cash flow and impede deleveraging, undermining the balance sheet improvements highlighted in the DeepValue report. This exacerbates existing litigation risks, such as the generic pricing MDL, which were already flagged as thesis invalidation triggers. If the allegations reveal material misstatements, it could lead to further multiple compression, offsetting valuation benefits from operational improvements. However, if Perrigo resolves this swiftly without major impact, the core investment case around FCF generation and Opill growth might remain viable, though with heightened scrutiny.

Thesis delta

The BUY thesis previously assumed manageable litigation risks, but this new lawsuit significantly increases that exposure, shifting the risk-reward balance towards caution. While cost-savings programs and Opill growth are still tangible catalysts, the heightened legal overhang demands a reassessment, potentially moving the stance to HOLD until clarity on legal outcomes and execution milestones emerges.