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Mylan (MYL) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

Mylan N.V. MYL is scheduled to report fourth-quarter 2018 results on Feb 26, after the market closes.

The company’s performance has been mixed so far, with earnings missing estimates in two of the last four quarters. Mylan reported average negative earnings surprise of 1.95% over the said time frame. In the last reported quarter, the company’s earnings beat estimates by 6.8%. Let’s see how things are shaping up for this announcement.

Mylan’s stock has lost 17.5% in the past six months compared with the industry’s decline of 24.4%.


Factors to Consider

Along with third-quarter results, Mylan reiterated its outlook for 2018. Mylan expects 2018 total revenues of $11.25-$12.25 billion. The company anticipates adjusted earnings per share (EPS) around $4.55-$4.90.

Mylan proactively discontinued a number of products, while also transferring some to other sites. These have led to a temporary disruption in supply of certain products and reduction in volumes in North America generic sales. This, in turn, might impact sales.

While Mylan has one of the largest product portfolios among all generic pharmaceutical companies, the company has suffered a few setbacks in recent times. Mylan suffered a major setback as rival Teva Pharmaceutical Industries Ltd. TEVA won the FDA approval for the first generic version of the former’s EpiPen and EpiPen Jr (epinephrine) auto-injector for the emergency treatment of allergic reactions, including those that are life-threatening (anaphylaxis), in adults and pediatric patients.

The approval of a generic will negatively impact EpiPen sales of Mylan, as the generic will obviously be priced lower. Mylan was earlier under the scanner for high price of the product.  We note that the company already has its own authorized generic for the product. Teva has also launched its generic version.

During the earnings call, we expect investors to focus on the performance of EpiPen, newly launched biosimilars and other updates from the company’s pipeline.

Mylan received a significant boost when the FDA approved its generic version of GlaxoSmithKline’s Advair Diskus — Wixela Inhub — following a few setbacks. Notably, this is the first generic of Advair Diskus approved, which, in turn, will give Mylan an edge over its competitors. Mylan has launched the generic.

The biosimilar business continues to gain traction. Mylan and partner Biocon had earlier obtained FDA approval of Fulphila, a biosimilar of Neulasta. The European Commission (EC) granted marketing authorization to Hulio, a biosimilar of Humira, for all indications. Approval of new biosimilars should boost sales.

In November 2019, Mylan and partner Theravance Biopharma, Inc. obtained FDA approval for Yupelri (revefenacin) inhalation solution for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD). Yupelri, a long-acting muscarinic antagonist (LAMA), is the first and only once-daily, nebulized bronchodilator approved for the treatment of COPD in the United States.

Earnings Whispers

Our proven model doesn’t show that Mylan is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat on earnings. That is not the case here as you will see below.

Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.37%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Mylan currently carries a Zacks Rank #3. While the rank is favorable, the company’s negative ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are few pharma company you may want to consider, as our model shows that it has the right combination of elements to deliver an earnings beat this quarter.

Mallinckrodt MNK has an Earnings ESP of +2.25% and a Zacks Rank #2. The company is scheduled to report results on Feb 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jazz Pharmaceuticals plc. JAZZ has an Earnings ESP of +3.55% and a Zacks Rank #3. It is scheduled to release results on Feb 26.

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