We are maintaining our Neutral recommendation on
) with a target price of $26.00. The stock carries a Zacks #3 Rank
(Hold rating) in the short run.
Mylan performed well in the second quarter of 2012, beating the
Zacks Consensus Estimate both in terms of revenue and earnings.
Mylan's second quarter 2012 earnings (excluding special items) of
$0.60 per share beat the Zacks Consensus Estimate by 5 cents.
Second quarter earnings increased 15% from the year-ago quarter.
Higher revenues and gross margin expansion led to a rise in second
quarter 2012 earnings. Revenues climbed 7% to $1.69 billion,
beating the Zacks Consensus Estimate of $1.66 billion.
Mylan is one of the leading players in the global generics market.
Its generics business has been consistently performing well.
Mylan's generic unit has seen quite a few launches over the past
few months. Important approvals/launches include its generic
) Avapro and Avalide,
) Diovan HCT,
) Actos and Actoplus Met,
) Provigil and
) Singulair among others.
As of September 28, 2012, Mylan had 168 abbreviated new drug
applications (ANDAs) pending approval by the US Food and Drug
Administration (FDA), targeting $79 billion in branded sales
annually. Mylan believes that about 33 of these pending ANDAs are
first-to-file opportunities, representing approximately $20.7
billion in branded sales. The revenue figures are as per IMS Health
for the 12 months ending June 30, 2012. Mylan is on-track for the
launch of more than 650 new products in 2012.
We are also pleased by Mylan's focus on emerging markets. Over the
long term, the biggest opportunities for growth in the generics
industry would be expansion in emerging markets.
However, we are concerned about Mylan's below-par performance in
the Europe, the Middle East and Africa (EMEA) region. We note that
pricing pressure and currency fluctuations in several European
markets have been impacting the performance of the EMEA segment
over the last few quarters. Additionally, with most large branded
drugs due to lose patent exclusivity within 2017-2018, we have
little visibility on the growth prospects for generic companies
like Mylan beyond that time frame.
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