Guggenheim Sidelined on Mylan (MYL) Until More Clarity on M&A Strategy, FY18 Expectations is Offered
Guggenheim remains Neutral on Mylan (Nasdaq: MYL) following Q3 results issued earlier Friday.
Analyst Louise Chen noted the following key points from the report:
- Appointment of Ranjan Ray Chaudhuri (strong OTC experience) underscores MYL's commitment to acquiring PRGO, in our view;
- Strong sales performance, +14% YOY, excluding EPD;
- Gross margin improvement driven by EPD, new products, and higher margins in North America;
- Better outlook for EpiPen post TEVA's launch delay until 2H16 and Auvi-Q recall;
- Generics growth in all regions (excluding EPD);
- Good borrowing capacity and financial flexibility with leverage at 2x EBTDA as of 3Q15; and
- FX continues to be a headwind.
Chen is Neutral on Mylan until more clarity is offered on: 1) If MYL successfully acquires PRGO or another company; and 2) The path to the company's target of $6.00 in EPS in '18.
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