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Will Mylan (MYL) Earnings in Q2 Disappoint Expectations?

Zacks Equity Research

Mylan (MYL) is set to report second quarter 2014 results on Aug 7 before the market opens. Last quarter, the company had posted a positive earnings surprise of 4.76%. Let’s see how things are shaping up for this announcement.

Factors at Play

The Generics segment is expected to perform well in the second quarter of 2014. Mylan has seen quite a few generic launches over the past few quarters. The newly launched products are expected to perform well, driving segmental growth.

Mylan was also in focus recently when it inked an all-stock deal with Abbott Laboratories (ABT) to buy the latter’s branded specialty and generics business in the developed ex-U.S. markets (read more: Mylan to Buy Abbott Generic Drug Unit ). We expect some updates on the impending deal at the company’s conference call.

We believe that the Specialty segment will rebound in the second quarter of 2014 from a disappointing first quarter led by strong sales of EpiPen Auto-Injector. However, foreign exchange movements are likely to adversely impact the top line. Moreover, increasing operating costs will hurt the bottom line.

Earnings Whispers?

Our proven model does not conclusively show that Mylan is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Mylan is 0.00% since the Most Accurate Estimate stands at $0.70, in line with the Zacks Consensus Estimate.

Zacks Rank #3 (Hold): Mylan’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements: a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3

VIVUS Inc. (VVUS) has an Earnings ESP of +6.45% and holds a Zacks Rank #3. VIVUS will be reporting second quarter earnings on Aug 7 after market closes.

Myriad Genetics Inc. (MYGN) has an earnings ESP of +4.35% and holds a Zacks Rank #1(Strong Buy). Myriad will report fiscal fourth quarter 2014 earnings on Aug 12 after market closes.

Read the Full Research Report on MYL
Read the Full Research Report on VVUS
Read the Full Research Report on MYGN
Read the Full Research Report on ABT

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