A month has gone by since the last earnings report for Mylan (MYL). Shares have added about 10% 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.
Mylan's Q3 Earnings Beat Estimates, Revenues Miss
Mylan reported adjusted earnings of $1.17 per share in the third quarter of 2019, which beat the Zacks Consensus Estimate of $1.14 but declined from $1.25 reported in the year-ago quarter.
However, third-quarter revenues of $2.96 billion missed the Zacks Consensus Estimate of $3.03 billion. Revenues increased 3% reportedly and 6% at constant exchange rate (“CER”) from the prior-year quarter.
Quarter in Detail
The company posts results in three segments on a geographic basis — North America, Europe and Rest of World.
North America segment’s net sales came in at $1.09 billion, up 8% year over year. The growth was driven by higher sales of new products, especially Wixela Inhub and Yupleri. This was partially offset by lower sales of existing products due to lower volumes as well as lower pricing and changes in the competitive environment, including loss of exclusivity on tadalafil.
Net sales in the Europe segment were $1.05 billion, up less than 1% on the back of higher sales of new products including Hulio, and higher volumes of existing products. However, it was partially offset by unfavorable impact of foreign currency translation and lower pricing on existing products. Net sales in the segment were up 6% at CER.
Rest of World segment net sales of $793.7 million were up 3%, driven by new product sales and higher volumes of existing products. This was partially offset by lower pricing on existing products and unfavorable impact of foreign currency translation. Net sales were up 4% at CER.
Adjusted gross margin of 53% declined from 55% in the year-ago quarter.
The company updated its guidance for 2019. Revenues are projected between $11.5 billion and $12 billion compared with the previously expected range of $11.5 billion - $12.5 billion.
The company anticipates adjusted EPS around $4.20-$4.40 (previously $3.80-$4.80).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
Currently, Mylan has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 this revision indicates a downward shift. 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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