Is Viatris a good buy opportunity after the current dip?

Viatris Inc. (NASDAQ: VTRS) shares have weakened more than 20% after the company reported fourth-quarter results this Monday.

Fourth-quarter results and revenue outlook disappointed several banks and research companies, which lowered their price targets on Viatris shares.

The new share repurchase program

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Viatris is an American global healthcare company that produces and sells a variety of medicines, with 1,400 approved therapeutic molecules in its portfolio.

Viatris reported its fourth-quarter results this week; total revenue has increased by 20.6% Y/Y to $4.33 billion, while the GAAP earnings per share were -$0.22 (misses by $0.45). Adjusted EBITDA rose 39% Y/Y to $1.42 billion in the fourth quarter, and the company repaid $2.1 billion of debt during the last year.

During the quarter, developed markets sales rose 8% Y/Y to $2.56 billion, brands sales rose 41% Y/Y to $2.61 billion, and it is important to mention that sales in China grew 164% to $503.8 million.

Adjusted gross profit grew 29% Y/Y to $2.46 billion, and Viatris reported that complex generics and biosimilars delivered strong growth. Michael Goettler, CEO of Viatris, said:

I’m very pleased to say that we have now delivered four quarters consecutively of consistent and solid performance, meeting or exceeding our guidance.

The company’s management has authorized a share repurchase program of up to $1 billion and reported that it expects revenue in the range of $17 billion to $17.5 billion for the 2022 fiscal year.

Despite this, fourth-quarter results and revenue outlook disappointed some analysts, and shares of Viatris nosedived more than 20% in less than forty-eight hours. Bank of America lowered its rating and assigned a $13 price target on Viatris shares.

According to Bank of America, the quarterly financials did not meet the consensus, and the sale of Viatris biosimilar assets to India’s Biocon Biologics for up to $3.335 billion is not positive news for BofA.

A diversified financial services firm, Raymond James, reported that Viatris EBITDA forecast for 2022 was below expectations; still, the improved capital allocation strategy, including the buyback, could generate “some short-term recovery” after the selloff.

Viatris shares remain under pressure

Viatris shares have weakened more than 20% after the company reported fourth-quarter results, and the risk of further decline still persists.

This decline is disconnected from the company valuation, and the current price could be the opportunity to become a shareholder of the global leader in generic drugs.

Fundamentally looking, Viatris trades at less than three times TTM EBITDA, and shares of this company could provide solid returns over the next few years.

Summary

Viatris shares remain under pressure after the company reported fourth-quarter results this Monday. Bank of America lowered its rating and assigned a $13 price target on Viatris shares.

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