Perrigo Faces Securities Lawsuit as Cost-Reduction Programs Progress

What happened

Perrigo Company plc has been sued for alleged securities fraud between February 2023 and November 2025, adding a new legal challenge. This comes amid the company's ongoing execution of Project Energize and Supply Chain Reinvention, multiyear initiatives targeting significant cost savings to boost margins. DeepValue's report already flags litigation, including a generic pricing MDL, as a key risk that could trigger a downgrade if outcomes worsen. The securities lawsuit may increase unallocated expenses and management distraction, potentially complicating the timeline for delivering promised savings. However, Perrigo's low valuation and visible operational catalysts provide some buffer, though investor skepticism around execution risks is now heightened.

Implication

The securities lawsuit introduces additional legal overhang that may pressure Perrigo's earnings through higher litigation costs and potential settlements, directly affecting the cash flow needed for deleveraging. This distraction could impede management's focus on critical operational goals like Opill's rollout and supply chain improvements, risking delays in the projected savings from Energize and Reinvention programs. However, if Perrigo successfully defends or settles the case without material impact, the core investment thesis—centered on cost discipline and multiple expansion—could remain intact. The DeepValue report's monitoring of litigation expenses becomes even more crucial, and adverse outcomes might erode the margin of safety embedded in the current valuation. Ultimately, while the lawsuit adds near-term uncertainty, the long-term case still hinges on Perrigo's ability to execute its strategic plans amidst evolving legal pressures.

Thesis delta

The new lawsuit amplifies existing litigation risks identified in the DeepValue report but does not fundamentally shift the BUY thesis based on cost savings and growth initiatives. It reinforces the need for vigilant monitoring of legal costs and outcomes, as significant adverse developments could prompt a stance adjustment to HOLD. Investors should weigh this increased uncertainty against Perrigo's progress on operational milestones to assess the investment's risk-reward balance.