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Viatris (VTRS) Up 5.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Viatris (VTRS - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Viatris due for a pullback? 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.
Q3 Earnings Beat, Complex Generics Sales Dip
Viatris delivered adjusted earnings of 78 cents per share in the third quarter of 2023, down from 87 cents in the year-ago quarter but beating the Zacks Consensus Estimate of 74 cents per share.
Total revenues came in at $3.9 billion, down 3.3% year over year. The top line missed the Zacks Consensus Estimate by 1.01%.
Quarter in Detail
Revenues include sales and other revenues. Sales of $3.9 billion were down 3% from the year-ago quarter (3% on an operational basis).
The company reports results in four segments — Developed Markets, Emerging Markets, Japan, Australia and New Zealand (“JANZ”) and Greater China.
Developed market sales came in at $2.4 billion, down 4% (adjusted for the impact of the biosimilars’ divestiture in November 2022) from the year-ago quarter.
In November 2022, Viatris sold its biosimilars’ portfolio to Biocon Biologics Limited.
Sales from Emerging Markets came in at $642.5 million, down from $678.9 million reported in the year-ago quarter.
JANZ generated sales of $334.5 million, down 8%. Customer buying patterns impacted generic business in this segment.
Sales from Greater China came in at $548.4 million, down from $574 million year over year.
Revenues from Brands were down 1% year over year to $2.5 billion. Sales came in line with expectations driven by key brands like Yupelri and Dymista and incremental sales from Tyrvaya.
Tyrvaya was added to Viatris’ portfolio following the acquisition of Oyster Point.
Among these, Lipitor’s sales were $381.6 million, down from $420.4 million in the year-ago quarter. Yupelri sales came in at $58.3 million and boosted Brands’ business.
Complex generics sales came in at $174.4 million, down 46% due to the phasing of new product launches.
Generics, which include diversified product forms such as extended-release oral solids, injectables, transdermals and topicals, performed ahead of management’s expectations, including robust performance across the broader portfolio in developed and emerging markets. Revenues from this business came in at $1.2 billion, up 3%.
Viatris generated $135 million in new product revenues, primarily driven by the launch of generic lenalidomide and Breyna (generic for Symbicort) in the United States. For 2023, it targets to achieve more than $450 million in new revenues.
Adjusted gross margin came in at 59.2%, down from 60.5% in the year-ago quarter.
2023 Guidance Update
Revenues are projected between $15.4 billion and $15.6 billion (previous guidance: $15.5-$16 billion).
Other Updates
Viatris recently announced agreements on planned divestitures targeted for 2023 to simplify the organization.
The company has received an offer from Cooper Consumer Health to divest its Over-the-Counter (“OTC”) business for $2.17 billion. Viatris has, however, decided to retain its rights for Viagra and Dymista, as well as other select OTC assets within certain markets.
Viatris also entered into definitive agreements to divest its Women's Healthcare business and its Active Pharmaceutical Ingredients business in India. The company will divest its Women's Healthcare business, primarily related to oral and injectable contraceptives, to Insud Pharma, a leading Spanish multinational pharmaceutical company.
Viatris entered into an agreement to divest its rights to women's healthcare products Duphaston and Femoston to Theramex by fourth-quarter 2023.
Agreements have also been signed to divest commercialization rights in certain non-core markets that were acquired as part of the Upjohn transaction by year end.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
The consensus estimate has shifted -8.26% due to these changes.
VGM Scores
At this time, Viatris has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Viatris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Viatris is part of the Zacks Medical Services industry. Over the past month, Avantor, Inc. (AVTR - Free Report) , a stock from the same industry, has gained 13.8%. The company reported its results for the quarter ended September 2023 more than a month ago.
Avantor, Inc. reported revenues of $1.72 billion in the last reported quarter, representing a year-over-year change of -7.3%. EPS of $0.25 for the same period compares with $0.34 a year ago.
Avantor, Inc. is expected to post earnings of $0.22 per share for the current quarter, representing a year-over-year change of -31.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Avantor, Inc. Also, the stock has a VGM Score of B.
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Viatris (VTRS) Up 5.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Viatris (VTRS - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Viatris due for a pullback? 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.
Q3 Earnings Beat, Complex Generics Sales Dip
Viatris delivered adjusted earnings of 78 cents per share in the third quarter of 2023, down from 87 cents in the year-ago quarter but beating the Zacks Consensus Estimate of 74 cents per share.
Total revenues came in at $3.9 billion, down 3.3% year over year. The top line missed the Zacks Consensus Estimate by 1.01%.
Quarter in Detail
Revenues include sales and other revenues. Sales of $3.9 billion were down 3% from the year-ago quarter (3% on an operational basis).
The company reports results in four segments — Developed Markets, Emerging Markets, Japan, Australia and New Zealand (“JANZ”) and Greater China.
Developed market sales came in at $2.4 billion, down 4% (adjusted for the impact of the biosimilars’ divestiture in November 2022) from the year-ago quarter.
In November 2022, Viatris sold its biosimilars’ portfolio to Biocon Biologics Limited.
Sales from Emerging Markets came in at $642.5 million, down from $678.9 million reported in the year-ago quarter.
JANZ generated sales of $334.5 million, down 8%. Customer buying patterns impacted generic business in this segment.
Sales from Greater China came in at $548.4 million, down from $574 million year over year.
Revenues from Brands were down 1% year over year to $2.5 billion. Sales came in line with expectations driven by key brands like Yupelri and Dymista and incremental sales from Tyrvaya.
Tyrvaya was added to Viatris’ portfolio following the acquisition of Oyster Point.
Among these, Lipitor’s sales were $381.6 million, down from $420.4 million in the year-ago quarter. Yupelri sales came in at $58.3 million and boosted Brands’ business.
Complex generics sales came in at $174.4 million, down 46% due to the phasing of new product launches.
Generics, which include diversified product forms such as extended-release oral solids, injectables, transdermals and topicals, performed ahead of management’s expectations, including robust performance across the broader portfolio in developed and emerging markets. Revenues from this business came in at $1.2 billion, up 3%.
Viatris generated $135 million in new product revenues, primarily driven by the launch of generic lenalidomide and Breyna (generic for Symbicort) in the United States. For 2023, it targets to achieve more than $450 million in new revenues.
Adjusted gross margin came in at 59.2%, down from 60.5% in the year-ago quarter.
2023 Guidance Update
Revenues are projected between $15.4 billion and $15.6 billion (previous guidance: $15.5-$16 billion).
Other Updates
Viatris recently announced agreements on planned divestitures targeted for 2023 to simplify the organization.
The company has received an offer from Cooper Consumer Health to divest its Over-the-Counter (“OTC”) business for $2.17 billion. Viatris has, however, decided to retain its rights for Viagra and Dymista, as well as other select OTC assets within certain markets.
Viatris also entered into definitive agreements to divest its Women's Healthcare business and its Active Pharmaceutical Ingredients business in India. The company will divest its Women's Healthcare business, primarily related to oral and injectable contraceptives, to Insud Pharma, a leading Spanish multinational pharmaceutical company.
Viatris entered into an agreement to divest its rights to women's healthcare products Duphaston and Femoston to Theramex by fourth-quarter 2023.
Agreements have also been signed to divest commercialization rights in certain non-core markets that were acquired as part of the Upjohn transaction by year end.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
The consensus estimate has shifted -8.26% due to these changes.
VGM Scores
At this time, Viatris has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Viatris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Viatris is part of the Zacks Medical Services industry. Over the past month, Avantor, Inc. (AVTR - Free Report) , a stock from the same industry, has gained 13.8%. The company reported its results for the quarter ended September 2023 more than a month ago.
Avantor, Inc. reported revenues of $1.72 billion in the last reported quarter, representing a year-over-year change of -7.3%. EPS of $0.25 for the same period compares with $0.34 a year ago.
Avantor, Inc. is expected to post earnings of $0.22 per share for the current quarter, representing a year-over-year change of -31.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Avantor, Inc. Also, the stock has a VGM Score of B.