A month has gone by since the last earnings report for Mylan (MYL - Free Report) . Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mylan due for a pullback? 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. <p style="text-align: justify;"><u><strong>Mylan Q2 Earnings and Revenues Miss, Slashes Guidance</strong></u></p><p style="text-align: justify;">Mylan reported dismal results for the second-quarter as earnings and sales both missed estimates. The company also lowered its guidance. </p><p style="text-align: justify;">Adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate of $1.23 and were down from $1.10 reported in the year-ago quarter.</p><p style="text-align: justify;">Second-quarter revenues of $2.81 billion missed the Zacks Consensus Estimate of $2.96 billion and were down 5% from the prior-year period.</p><p style="text-align: justify;">Concurrently, the company announced that the Board has formed a strategic review committee and is actively evaluating a wide range of alternatives. This will further dampen investors’ sentiments.</p><p style="text-align: justify;"><strong>Quarter in Detail</strong></p><p style="text-align: justify;">The company posts results in three segments on a geographic basis namely North America, Europe and Rest of World.</p><p style="text-align: justify;">North America segment’s net sales came in at $1.0 billion, down 22%, primarily due to significantly lower volumes on existing products including EpiPen, partially offset by new product sales. Lower volumes were primarily driven by the timing of purchases and actions associated with the restructuring and remediation program at the Morgantown manufacturing facility including the discontinuation of a number of products and the significantly negative impact on production levels, product supply and operations. Pricing also declined slightly. Sales were negatively impacted by the implementation of new accounting standards.</p><p style="text-align: justify;">Sales from Europe were $990.6 million, up 4% as new product sales offset the negative impact of pricing and volume.</p><p style="text-align: justify;">Rest of World segment’s net sales of $764.1 million was up 10%, driven by new products primarily from the anti-retroviral franchise.</p><p style="text-align: justify;">Adjusted gross margin of 53.3% was slightly down from 53.8% in the year-ago quarter.</p><p style="text-align: justify;"><strong>2018 Outlook Lowered</strong></p><p style="text-align: justify;">Mylan updated its outlook as a result of the change in expected complex product launch and utilization assumptions and resizing of product opportunities in the United States, and the negative impact on operations of the restructuring and remediation program in Morgantown.</p><p style="text-align: justify;">Mylan now expects 2018 total revenues in the range of $11.25 billion to $12.25 billion, down from the previous projection of $11.75-$13.25 billion. Mylan anticipates adjusted EPS around $4.55-$4.90, down from the earlier estimate of $5.20-$5.60.</p>
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -16.04% due to these changes.
Currently, Mylan has an average Growth Score of C, a grade with the same score on the momentum front. 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Mylan has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.