The Zacks Medical Sector has struggled to find buyers year-to-date, declining more than 15% vs. the S&P 500’s 12% decline. Even over the last month, when the S&P 500 has gained a stellar 8.6%, the sector has still lagged.

The table below compares the performance of the sector and S&P 500 over several timeframes.

Image Source: Zacks Investment Research

One company residing in the sector, Viatris (VTRS Quick QuoteVTRS - Free Report) , is scheduled to report Q2 2022 results on Monday, August 8^th, before the market opens.

Viatris is a global healthcare company with a product portfolio comprising more than 1,400 approved molecules across a wide range of critical therapeutic areas, including globally recognized iconic and essential brands, generic, complex generic, and biosimilar products.

As it stands, Viatris is a Zacks Rank #4 (Sell) with an overall VGM Score of an A.

How does the medical giant shape up heading into the print? Let’s take a closer look.

Share Performance & Valuation

It’s been a bumpy ride for VTRS shares in 2022, down more than 25% and extensively underperforming the general market.

Image Source: Zacks Investment Research

Even over the last month, when the S&P 500 has rallied for an 8% gain, VTRS shares have continued their downwards trajectory, declining 5.5% in value.

Image Source: Zacks Investment Research

The poor price action of VTRS shares is undoubtedly a factor to note, with just a few buyers jumping in all year long.

However, the company does sport solid valuation levels, bolstered by its Style Score of an A for Value. VTRS’s 2.8X forward earnings multiple is well below its five-year median of 4.3X and represents a staggering 87% discount relative to its Zacks Sector.

Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have been primarily bullish for the quarter to be reported, with two positive estimate revisions hitting the tape over the last 60 days. However, the Zacks Consensus EPS Estimate for the quarter resides at $0.81, reflecting a steep 18% drop in earnings year-over-year.

Image Source: Zacks Investment Research

In addition, the top-line is also showing signs of weakness – Viatris is projected to have generated $4.1 billion in revenue for the quarter, a 9% decrease compared to year-ago quarterly sales of $4.6 billion.

The top and bottom-lines are undoubtedly heading in the wrong direction, indicating that shares could be a value trap.

Quarterly Performance & Market Reactions

Viatris has primarily reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in four of its last five quarters. Just in its latest quarter, the company recorded a solid 14.8% bottom-line beat.

Top-line results have been consistently reported above expectations as well, with the company penciling in four top-line beats over its last five quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

In addition, the market has reacted well to the company’s quarterly releases as of late, with shares moving upwards following four of the five previous earnings releases.

Bottom Line

Viatris shares have been stuck in a deep, unforgiving downtrend over the last year. Even over the last month, when the market has rallied, shares still can’t find the green.

Valuation levels appear solid, but the value doesn’t appear nearly as appealing with a declining top and bottom-line.

In addition, quarterly results have primarily been reported above expectations, and the market has reacted positively following four of its previous five prints.

Heading into the quarterly release, Viatris (VTRS Quick QuoteVTRS - Free Report) carries a Zacks Rank #4 (Sell) with an Earnings ESP Score of -3%.