Mylan Just Can’t Catch a Break

Coming into the start of last month, Mylan NASDAQ: MYL shares were up about 30% since November and were starting to look like they wanted to put in a bottom. After dropping close to 80% from their lofty heights of 2015, you’d forgive investors for hoping and praying for just that. The $17 mark had started to prove sticky for the bears to break through and there were buyers constantly to be found around there. Shares hopped off it multiple times since last May and after the first month of 2020 it was looking like they were ready to say farewell to it and head for higher figures. However, it doesn’t look like they’re out of the woods just yet.

Like the vast majority of stocks, the Netherlands headquartered, the generic pharmaceutical maker has been dumped in recent weeks as investors have taken flight out of equities as the shockwaves from the coronavirus’ spread continue. Three months of work was undone in three weeks and to compound it, the company released Q4 earnings late last week that came in weaker than expected.

Weak Earnings

GAAP EPS registered a hard miss and was barely in the black while revenue was also below the consensus. Coming into the release, the company had only beaten revenue estimates 25% in the previous two years while their EPS estimates had been revised downward 7 times in the previous three months - not the strongest base to be building a rally on.

CEO Heather Bresch said: "Mylan's 2019 full-year and fourth-quarter results demonstrate the durability and strength of the business model we have created as well as our continued long-term commitment to expand access to medicine. Our model continues to be best positioned to withstand the negative trends impacting the industry and allowed us to deliver on every key metric we set out to achieve in 2019, including total revenue, revenue from new product launches, and both adjusted cash flow and EPS. Our performance is the result of a number of key milestones, including growth across all segments in the fourth quarter and for the year on a constant currency basis.”

For all that being said, however, by the close of Friday’s session, the stock was back down testing the $17 level and with more weakness in equities expected this week, investors are sure to be getting nervous.

There has been some added softness across the health sector as a whole in recent days as Bernie Sanders inches closer to the Democratic nomination in the 2020 presidential race. Sanders’ rhetoric about healthcare for all is giving many on Wall Street pause for thought about the future profits of healthcare companies. And for those with shares performing as weakly as Mylan’s in recent years, it’s not hard to see why they’re finding it so hard to yield a decent rally.

Looking Ahead

To be sure, there are some positive developments happening for the bulls to focus on. In January, a European medical advisory group indicated they were leaning towards positive opinions in recommending approval of two of Mylan’s drugs. That same month the company received FDA approval for their generic of Bristol-Myer Squibbs’ NYSE: BMY Eliquis. They are also partnering with Pfizer’s NYSE: PFE Upjohn and will be rebranded as Viatris in the coming months. For many investors, this will be a welcome new look and chapter for the company.

In the meantime though, shares are looking precarious as they hover around a support line that has no second line of defense. They’re currently down 80% from all-time highs and a break below $17 would bring them to decade lows. For a company that’s been struggling to catch a break for months and years, the current conditions don’t add up to now being the time they finally catch one.