- Q4 earnings: $1.40 per share vs $1.28 per share expected
- Revenue: $3.19 billion vs $3.23 billion expected
- Mylan is expected to finalize a merger with Pfeizer’s Upjohn this year
- The stock price lost more than 20% in the last weeks, with more than 13% of losses coming in this week
Shares of drugmaker Mylan are trading nearly 15% lower this week after the company posted mixed earnings results in the fourth quarter and warned of the impact of the coronavirus on its financial results this year.
Fundamental analysis: Earnings beat, revenue misses estimates
The drugmaker reported adjusted earnings of $1.40 per share in the fourth quarter, higher than analysts’ estimates of $1.28 per share. Although the revenue grew 3.7% to $3.19 billion, it was still not enough to beat market expectations of $3.23 billion. Looking at the full year, Mylan delivered $11.5 billion in revenue.
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Mylan is on the track to merge with Pfizer’s unit Upjohn into a new company called “Viatris”.
“2019 was a strong year for Mylan. In the fourth quarter and full year, Mylan’s businesses grew across all segments on a constant currency basis,” said Heather Bresch, Chief Executive Officer and Executive Director of the company.
For this year, Mylan expects a revenue between $11.5 billion and $12.5 billion, with a midpoint of $12 billion coming in slightly higher than $11.92 billion expected from the market. The 2020 outlook excludes the impact of the Upjohn deal.
“Although we widened the ranges to take into consideration certain factors, the midpoint of our guidance is in line with what we previously disclosed for 2020 in conjunction with the Upjohn transaction,” added Bresch.
Understandably, investors were eager to find out more about Mylan’s take on the coronavirus. As expected, the company expects to take a hit due to the virus outbreak.
“Our business exposure in China specifically is limited. However, given the global nature of our supply chain, operations and businesses, our results could potentially be impacted,” said Bresch. In addition, she also warned that the continued coronavirus outbreak could lead to drug shortages.
“The whole industry is in one way or other way connected with China, but you would expect us to be much better placed,” added President Rajiv Malik.
Technical analysis: Stock lost more than 20% in last 15 days
Mylan stock price has been one of the worst stock market performers in the prior years. The company lost more than 60% of its value in the last 2 years as the stock price approaches 9-year lows.
As seen in the chart below, the price action trades above all key technical indicators e.g. moving averages – 100 WMA and 200WMA, descending trend lines etc. There is a strong support for the stock price below the $17 mark, which if broken, could open the road for the 2011 low of $15.50.
Overall, it doesn’t look very good for Mylan bulls. It looks like the bears are determined to trigger stops below the multi-year lows near the $17 handle. On the upside, the price action needs to get back above $23 in order to stage a more meaningful recovery.
Shares of Mylan have taken yet another hit after the company reported mixed earnings for the fourth quarter, while also issuing a warning that its results “could potentially be impacted” due to the coronavirus outbreak.