Investors shun Mylan over sales misses

Bloomberg

Even after losing a third of its market value over the past year, Mylan NV hasn’t been able to win back investors. “This is a name where sentiment is really, really bad,” Evercore ISI analyst Umer Raffat told clients, after visiting with investors. Raffat was quick to defend the stock in light of the feedback, reiterating his bullish stance.
Mylan is the second-worst performer among global generic and specialty pharma peers over the past year, trailing only Perrigo Co. Mylan’s forward price-to-earnings ratio has fallen to 6.4, the lowest in the S&P 500 Pharmaceuticals Index. The company has also missed revenue estimates in seven of the past eight quarters and expects adjusted cash flow to decline this year amid a turbulent generic-drug market. The shares fell 1.6 percent at 1:32 pm in New York amid a broad market slump.
Mylan has gained 5 percent so far in 2019, in-line with the S&P 500 Health-Care Index.
“People don’t want to invest in the stock because of management,” Bloomberg Intelligence analyst Curt Wanek said by phone. “They have continually given guidance that was very ambitious, and have failed to meet it consistently over time.”
Investors are starting to run out of patience. At least 10 holders sold more than 100 thousand shares to exit their positions in the stock in the fourth quarter, according to data compiled by Bloomberg. One of those investors, who asked not to be named because he wasn’t authorised to speak publicly, described the stock as a “value trap.”
The investor cited Mylan’s earnings misguidance, manufacturing problems at a major plant in Morgantown, West Virginia, in addition to drug-approval delays. Mylan’s generic version of Allergan’s top-selling eye drug Restasis, for example, was expected in late February, but almost a month later, “we haven’t heard anything,” BI’s Wanek said.
Another drug, a copy of Glaxo’s top-selling asthma therapy Advair, was approved three months later than the Canonsburg, Pennsylvania-based company had forecast.