We are maintaining our Neutral recommendation on
) with a target price of $30.00.
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Why the Reiteration
Mylan performed well in the fourth quarter of 2012. Mylan's
fourth quarter 2012 adjusted earnings of 65 cents per share beat
the Zacks Consensus Estimate by a penny. The earnings beat was
primarily attributable to higher revenues. Earnings also
increased 23% from the year-ago quarter. Revenues climbed 13% to
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 recent launches include Mylan's
generic version of
Valeant Pharmaceuticals International
) Zovirax ointment Apart from Mylan,
Dr. Reddy's Laboratories Ltd.
) too has been making multiple generic launches over the past few
As of Apr 3, 2013 Mylan's generic unit had 178 abbreviated new
drug applications (ANDAs) pending approval by from the US Food
and Drug Administration (FDA). The ANDAs represent annual sales
worth $78.4 billion, according to data released by IMS Health.
Mylan believes that 35 of these pending ANDAs are potential
first-to-file opportunities. Data released by IMS Health further
revealed that the 35 ANDAs represent annual branded sales worth
$20.3 billion, for the 12 months ending Jun 30, 2012.
We are also pleased by Mylan's focus on the emerging markets.
Over the long term, the biggest opportunities for growth in the
generics industry would be expansion in emerging these markets.
We note that Mylan is witnessing pricing pressure and currency
fluctuations in several European markets, which have been
affecting the performance of the Europe, Middle East & Africa
segment since the last few quarters. The performance of the
segment remains a concern, despite its encouraging showing in the
final quarter of 2012.
We see limited upside potential until more visibility is obtained
on Mylan's pipeline development and hence retain our Neutral
stance on the stock.
Other Stocks to Consider
The stock carries a Zacks Rank #2 (Buy).
) too carries a Zacks Rank #2 in the generic space.