Mylan shares sink as bleak profit outlook sparks growth concerns By Reuters

(Reuters) – Mylan (NASDAQ:) NV shares slid 10 percent on Wednesday after the generic drug maker predicted poor 2019 earnings that led some Wall Street analysts to wonder if its finances would worsen further.

Mylan said on Tuesday its lower-than-expected profit outlook was due to rising costs related to marketing and research and development.

It added that product launches should offset revenue declines for existing products this year as prices of generic drugs remain under pressure due to increased competition.

“Even with the approvals and launches of Copaxone, Neulasta and Advair these approvals are only providing some relief, but are not altering the systemic problems inherent with the generic model,” Cowen & Co analyst Ken Cacciatore said in a report to clients.

Mylan this month launched its generic version of GlaxoSmithKline’s blockbuster asthma treatment Advair at a price 70 percent lower than the branded medicine.

Five brokerages cut their 12-month targets on Mylan’s share price, and analysts at Cowen & Co were the most negative with a $25 target, a third lower than the median Wall Street price target.

“Clearly spending roughly $15 billion on product and company acquisitions and having flat cash generation over 4-5 years should be alarming,” Cacciatore said.

Generic drug prices in the United States have been declining as regulators approve more cheaper, copycat drugs, spurring competition and weighing on the profits of generic drug makers like Mylan and Teva Pharmaceutical Industries (NYSE:) Ltd.

Additionally, manufacturing troubles at Mylan’s Morgantown plant in West Virginia is hurting profits.

The market would have to see evidence that the company’s increased investments in 2019 are translating to higher revenue before Mylan’s stock price recovers, said JPMorgan (NYSE:) analyst Chriss Schott.

A “lack of earnings visibility makes it hard to tell if Mylan is still built to last,” Cantor Fitzgerald analysts said.

Eleven of 16 Wall Street analysts covering Mylan have positive ratings, while five have neutral or “hold” ratings, according to IBES data from Refinitiv.

Mylan shares were last down 9.5 percent at $27.72 in early trade. The stock has fallen nearly 27 percent over the past 12 months.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.