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Mylan (MYL) Down 20.3% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Mylan (MYL). Shares have lost about 20.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Mylan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Mylan's Q4 Earnings Beat, Revenues Miss Estimates

Mylan reported adjusted earnings of $1.40 per share in the fourth quarter of 2019, beating the Zacks Consensus Estimate of $1.29. Also, the reported figure improved from the year-ago quarter’s $1.30.

However, quarterly revenues of $3.19 billion missed the Zacks Consensus Estimate of $3.21 billion. Revenues increased 4% reportedly and 5% at constant exchange rate (“CER”) from the prior-year quarter.

Quarter in Detail

The company posts results in three segments on a geographic basis — North America, Europe and Rest of World.

The North America segment’s net sales came in at $1.13 billion, up 3% year over year. This increase was primarily driven by new product sales, partially offset by a decline in sales of existing products due to lower volumes, and lower pricing, to some extent. New product sales were primarily aided by sales of the Wixela Inhub and other new products. The lower sales of existing products came in due to changes in the competitive environment, including the loss of exclusivity of tadalafil.

Net sales in the Europe segment came in at $1.11 billion, up 2% year on year. This upswing primarily resulted from new product sales and higher volumes of existing products. Net sales in the segment were up 5% at CER.

The Rest of World segment net sales of $927.9 million were up 9% on higher volumes of the existing products sold in certain emerging markets, China and Japan, as well as new product sales, primarily in Australia, India and certain emerging markets. Net sales were up 9% at CER.

Adjusted gross margin of 53.3% declined from the year-ago quarter’s 54.6%.
2019 Results

Revenues for the full year came in at $11.50 billion, up 1% from the prior year.  Earnings per share came in at $4.42 compared with the $4.58 recorded in 2018.

2020 Guidance

Revenues are projected between $11.5 billion and $12.5 billion.
 

How Have Estimates Been Moving Since Then?

Estimates revision followed a flat path over the past two months.

VGM Scores

Currently, Mylan has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Mylan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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