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Tuesday, June 22, 2021

Mylan (MYL) Down 3.7% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Mylan (NASDAQ:MYL). Shares have lost about 3.7% 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 the most recent earnings report in order to get a better handle on the important drivers.

Mylan Q2 Earnings Beat Estimates, Revenues Fall Y/Y

Mylan reported adjusted earnings of $1.11 per share for the second quarter of 2020, beating the Zacks Consensus Estimate of 95 cents. Also, the bottom line improved from the year-ago quarter’s $1.03.

Further, quarterly revenues of $2.73 billion beat the Zacks Consensus Estimate of $2.70 billion. However, revenues decreased 4% reportedly and 2% at constant exchange rate (CER) from the prior-year quarter. This downside was primarily due to lower pricing and volumes from net sales of existing products.

Per the company, the COVID-19 pandemic unfavorably impacted net sales in the reported quarter, especially in Europe and Rest of World, thanks to weak retail pharmacy demand, fewer non-COVID-19 related patient hospital visits and a decline in meetings with prescribers and payors.

Quarter in Detail

The company posts results under three segments on a geographic basis, namely North America, Europe and the Rest of the World.

The North America segment’s net sales came in at $1.04 billion, up 2% year over year. This increase was primarily driven by higher volumes of existing products and partially on new product sales. Expansion in volumes was primarily boosted by expected growth of Yupelri, Inhub and Wixela.

Net sales in the Europe segment came in at $935 million, down 6% year on year. This downtrend was primarily due to soft volumes from net sales of existing products due to COVID-19 adversity, the unfavorable impact of foreign currency and to a lesser extent, lower pricing of sales of existing products.

The Rest of the World segment’s net sales of $721.9 million fell 10% due to the unfavorable impact of foreign currency translation and the negative impact from COVID-19 in China. In addition, net sales of existing products were affected by lower pricing, primarily because of government price cuts in Australia and Japan.

Adjusted gross margin of 54% was flat with the year-ago quarter’s level.

2020 Guidance

Due to the unfavorable impact of the COVID-19 pandemic, Mylan tightened its full-year guidance and expects a similar adverse impact on the second half of 2020. Revenues are now projected between $11.5 billion and $12 billion. The Zacks Consensus Estimate stands at $12.10 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Mylan has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, 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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