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Mylan (MYL) Down 9.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Mylan (MYL - Free Report) . Shares have lost about 9.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Mylan Beats on Earnings, Misses Revenues in Q3

Mylan’s adjusted earnings of $1.25 per share beat the Zacks Consensus Estimate of $1.17 and were up from $1.10 in the year-ago quarter.

However, third-quarter revenues of $2.86 billion missed the Zacks Consensus Estimate of $2.87 billion and were down 4% from the prior-year quarter.

Quarter in Detail

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

North America segment’s net sales came in at $1.01 billion, down 14%. This decline was primarily due to lower volumes on existing products like the EpiPen Auto-Injector. This was partially offset by new product sales, including the recent launch of Fulphila, a biosimilar of Neulasta. The decline in volumes was primarily driven by the timing of purchases of products by customers, divestiture of certain contract manufacturing assets, loss of exclusivity of a product, and actions associated with the restructuring and remediation program at the Morgantown manufacturing facility.

The FDA completed an inspection at Mylan's plant in Morgantown, West Virginia earlier this year and made observations through a Form 483. Thereafter, Mylan submitted a comprehensive response to the FDA. During the second quarter of 2018, Mylan started a restructuring and remediation program to reduce complexity at the Morgantown manufacturing facility, which led to the discontinuation and transfer of a number of products to other manufacturing sites, a reduction of the workforce and extensive remediation activities. These actions have led to a temporary disruption in supply of certain products.
Net sales in the Europe segment were $1.04 billion in the quarter, an increase of $0.5 million, which was primarily driven by new product sales and higher  volumes on existing products.

Rest of World segment’s net sales of $773.7 million were up 4%, driven by new products.

Adjusted gross margin of 55% was slightly down from 53% in the year-ago quarter.

2018 Outlook Reiterated

Mylan expects 2018 total revenues of $11.25-$12.25 billion. The company anticipates adjusted EPS around $4.55-$4.90.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

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 trending upward 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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