Perrigo Rises After Deutsche Bank Highlights Sales Via Amazon White-Label

Shares of Perrigo (PRGO) are on the rise after Deutsche Bank analyst Gregg Gilbert told investors in a research note that Amazon (AMZN) has begun to sell a number of over-the-counter healthcare products, sourced by the company, under a brand called "Basic Care."

AMAZON 'BASIC CARE' SOURCED BY PERRIGO: In a research note this morning, Deutsche Bank's Gilbert told investors that in recent months, Amazon has begun to sell a number of over-the-counter healthcare products, sourced by Perrigo, under a brand called "Basic Care." Such a practice is commonly referred to as "white-labeling," where a product is manufactured by one company and packaged and sold by other companies under various brand names. The analyst noted that the price per unit to the consumer tends to be similar to Wal-Mart's (WMT) pricing and generally below that of some other retailers. Additionally, Gilbert pointed out that it does not appear that Amazon is going out of its way to position its "Basic Care" brand on the site in a preferential way, at least for now. Moreover, the analyst argued that he would not expect Perrigo to "play up" this development as Amazon is still just a small customer and the company would not want to "rock the boat" unnecessarily with its larger customers. Gilbert also assumes that Perrigo is not offering better prices to the e-commerce giant, and that for now, Amazon will only be sourcing products for "Basic Care" from Perrigo. The analyst told investors that he continues to see Perrigo as well positioned to take advantage of the online sales opportunity for OTC products, which is still in its early innings. While Gilbert does not see much potential for near or medium term upside for Perrigo tied to the arrangement with Amazon, he contended that the longer-term opportunity would be tied to higher rates of conversion from national brands to store brands. The analyst reiterated a Buy rating and $97 price target on Perrigo's shares.

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