Seeking Alpha
Long only, value, growth, special situations
Profile| Send Message|
( followers)  

Summary

  • Q2 2014 EPS reported of $0.69 per share was up 1% Y/Y.
  • Q2 revenue reported was $1.84 billion, up 8% Y/Y.
  • The Q2 report has confirmed my earlier opinion of the stock.

Mylan (NASDAQ:MYL) reported earnings today that were roughly in line with analyst EPS and revenue estimates. EPS came in at $0.69, which was 1 cent below analyst estimates. Revenue came in at $1.84 billion, which was $40 million below estimates. Mylan expects third-quarter adjusted diluted EPS in the range of $0.90 to $0.95 and 2014 full-year EPS to be between $3.25 to $3.45. In Mylan's earnings press release, a few highlights are of particular interest:

  1. A slightly higher gross margin. The company reported non-GAAP margin of 50% compared to 49% in the year-ago period.
  2. Reaffirmation of the company's target of $6 EPS in 2018.
  3. Q4 is expected to be the strongest quarter of the year, partially due to the fourth-quarter launches of generic Copaxone and generic Celebrex.

In my previous article about Mylan titled, "Mylan: Buy, Sell, Or Hold", I showed that the company has strong financials, but is trading at a slightly high P/E valuation. I considered it a hold at that time. This morning Mylan trimmed 2014 EPS guidance and after the Q2 earnings report, the stock fell to about $46.75 (as of 10:00 am Thursday). Using the middle of the new guidance ($3.35), I calculate a 2014 forward P/E of about 12.8.

I still consider the stock a hold at this time, but am very interested to see how the Copaxone and Celebrex launches go in Q4. Also note that if Mylan can stick to its EPS guidance of $3.35 per share in 2014 and $6 per share in 2018, then that equates to over 15% annual EPS growth. Mylan is on my radar and I think it is a company to watch for anyone interested in pharma stocks.

Source: Update: Mylan Earnings