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Viatris (VTRS) to Report Q4 Earnings: What's in the Cards?

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We expect investors to focus on the top and bottom-line numbers when Viatris (VTRS - Free Report) , a global healthcare company, reports its fourth-quarter results.

The company beat earnings estimates in three of the trailing four quarters and missed in one, with the average surprise being 6.47%. In the last reported quarter, the company beat expectations by 4.88%.


Factors to Consider

Viatris reports segment information based on markets and geography — Developed Markets, Emerging Markets, Japan, Australia, and New Zealand (JANZ) and Greater China.

Unfavorable movements in foreign exchange rates impacted results in the first nine months of 2022 and the scenario is likely to have prevailed in the fourth quarter. 

Net sales from Developed markets were down 8% in the previous quarter. This trend is likely to have continued in the fourth quarter.

Sales from Emerging Markets were down 14% in the previous quarter and sales are likely to have decreased in the to-be-reported quarter as well.

Sales from JANZ were down 24% in the previous quarter and the fourth quarter is likely to have seen a similar trend.

Sales from Greater China markets were up 1%. However, sales in the fourth quarter are likely to have declined due to lockdowns.

On a segment basis, base business brands increased 1% (operational basis) and performed better than expectations, driven by products such as Lipitor, Brufen, and Creon. A similar or better performance might have been witnessed by the company in the to-be-reported quarter.

Complex generics and biosimilars performed slightly below expectations due to increased competition and customer buying patterns. In November 2022, Viatris closed its transaction with Biocon Biologics Limited. Viatris had earlier announced an agreement with Biocon Biologics Limited whereby the former would sell its biosimilars portfolio to the latter. Sales must have been impacted by this sale. Concurrent with the closure, management stated that its reported total revenues for the year to be lower by approximately $80 million.

Generics, which include diversified product forms such as extended-release oral solids, injectables, transdermals and topicals, performed inline with management’s expectations, benefiting from the launch of lenalidomide in the United States. A similar trend is likely to have prevailed in the to-be-reported quarter.

Management stated that Viatris is on track to achieve approximately $525 million in new product revenues in 2022. This is below the company’s previous expectations due to the timing of launches.

Per management, gross margin is likely to have moderated from the third quarter due to product and segment mix and SG&A is likely to have increased in the fourth quarter on a sequential basis.

Other Updates

Last month, Viatris closed its acquisitions of Oyster Point Pharma and Famy Life Sciences to establish a new Eye Care Division.  The acquisitions have the potential to add at least $1 billion in sales by 2028.

Share Price Performance

Viatris’ stock has lost 22.6% in the past year compared with the industry’s decline of 23.5%.

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Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Viatris this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Viatris is -5.52% as both the Most Accurate Estimate stands at 66 cents while the Zacks Consensus Estimate are pegged at 70 cents.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks to Consider

Here are a few stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Editas Medicine (EDIT - Free Report) has an Earnings ESP of +8.58% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings of EDIT beat estimates in each of the trailing four quarters. It delivered an earnings surprise of 11.12%, on average.

Theravance Biopharma (TBPH - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #2.

TBPH beat earnings estimates in two of the last four quarters, with the average earnings surprise being -26.36%.

Vir Biotechnology (VIR - Free Report) has an Earnings ESP of +338.10% and a Zacks Rank #2.

VIR topped earnings estimates in three of the last four quarters and has a four-quarter earnings surprise of 3.182.4%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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