Research

MYL – Strong fundamentals imply market expectations for a Uniform ROA compression to historical lows is far too bearish, even though management is concerned about near-term outlook

  • Mylan N.V. (MYL:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 7.8x Uniform P/E, implying expectations for profitability to fall to historical lows. Despite management’s concerns about rebates, product launches, and investments, given historical performance, these expectations are overly bearish, and upside is likely warranted
  • Specifically, management may be concerned about policies regarding Part D patients and rebates, the potential of 2018 product launches, and specifically their biosimilar trastuzumab launch. Moreover, they may be exaggerating the potential benefits of key brand investments, and the quality of their Rest of World portfolio
  • That said, market expectations are overly bearish, and even with potential near-term headwinds, long-term outperformance remains warranted should MYL just maintain profitability near historical averages.