Mechelany Advisors’ Investment Ideas are here to make our readers make profitable investments over different time-horizons. Our value oriented investment management style and research focuses on cheap companies with great and solid businesses to be held as core holdings in portfolios. We provide individual Investment ideas based on our multi-layered screening and valuation process combining structural, top-down macro, sectoral analysis, bottom-up stock selection and valuation analysis. Our Investment Ideas may be included in our Model Portfolio while some may not be included if they do not fit the global risk profile and asset allocation chosen at the time of selection.
As our readers know, we are expecting a sharp correction to take place in global equity markets over the next two months, so the timing may not be the best to put out BUY recommendations…
However, within an global environment of greed, speculation and and overvaluation, there are islands of value that should ne be overlooked.
VIATRIS INc. the world leader is Generic Drugs is one of them, especially after having taken all the hits of COVID and of of the MYLAN / UPJOHN merger in 2020
BUY VIATRIS INC VTRS US @ 13.30
VIATRIS Inc. is a US$ 16 Billion mid-cap company coming form the merger of then generic businesses of MYLAN and UPJOHN. The new entity is largely led by Pfizer executives and registered in Delaware. The new entity is anticipated to leverage the stand-alone Mylan infrastructure consisting of roughly 55 manufacturing and research and development facilities and that were largely acquired, including Matrix Laboratories and the generics business of Germany-based Merck KGaA.
The combined portfolio consists of the mature Upjohn drugs with notably better economics and Mylan’s portfolio of more than 7,500 generic, specialty, and over-the-counter active ingredients and medicines, including EpiPen (treatment for anaphylaxis acquired through the Merck KGaA transaction).
Unlike its generic peers, the company has made the most progress on the biosimilar front.
Viatris’ ability to leverage its newly expanded international exposure, as well as a budding biosimilar portfolio, are key growth drivers but may not be enough to offset litigation overhangs.
An aging branded-drug portfolio flattens near-term revenue, and there are few compelling near-term catalysts for growth.
The main attractiveness of the company comes primarily from the US$ 1 billion in operational savings coming form the merger of Upjohn and legacy Mylan, and the extremely cheap valuation metrics reached by the company.
VIATRIS took all the hits of its 2019 Merger costs and of COVID in 2020 in its 2020 FY, leading to a loss or 670 Million in Q4 2020 and profits of 898 Billion for the full year.
Net profits should jump in 2021 to 4.2 Billion, leading Earnings per share to jump to 3.42 in 2021 and 3.51 in 2022, leaving the company on an extremely undemanding 3.6x P/E ratio and a huge 26 % earnings yields. ( Net profits / Market Capitalisation )
The Company will report its first quarter earnings on May 10th 2021, only two weeks away.
VIATRIS is the ultimate VALUE STOCK with a lot of upside potential due to the rationalisation of its businesses and its leadership in manufacturing and distribution.
At 3.6x earnings and earnings yield at 26 % per annum, the stock is dead cheap and trading at a 10 year low.
The consensus of analysts has a target price at 19, we see the stock rising to 27 ( more than doubling form current levels.
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