uploads/2017/01/Chart-01-2-1.jpg

Mylan’s Valuation Compared to Its Peers

By

Updated

A look at Mylan’s valuation

Mylan (MYL) is a leading pharmaceutical company that manufactures and markets more than 1,400 generic and specialty pharmaceutical products. In order to expand its product portfolio, the company completed the acquisition of the Cold-EEZE brand from ProPhase Labs (PRPH) on January 9, 2017, to expand its over-the-counter portfolio. It completed its acquisition of Meda AB in August 2016.

Article continues below advertisement

Forward PE

As of January 10, 2017, Mylan (MYL) was trading at a forward PE (price-to-earnings) multiple of ~7.3x, compared to the industry average of 16.3x. Over the last year, the company’s forward PE has traded in the range of 6.9x–11.1x.

Competitor Perrigo (PRGO) is trading at a forward PE multiple of 12.9x. Teva Pharmaceutical (TEVA) and Allergan (AGN) are trading at PE multiples of 8.8x and 15.0x, respectively.

Forward EV-to-EBITDA

On a capital structure–neutral and excess cash–adjusted basis, Mylan was trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 8.4x. The industry average is ~11.3x as of January 10, 2017.

Analyst recommendations

Mylan stock has fallen ~21.0% over the last 12 months, mainly due to controversies related to pricing of the EpiPen. Analysts estimate that the stock has the potential to return 28.7% over the next 12 months. Their recommendations show a 12-month target price of $50.11 per share compared to the last price of $38.95 per share on January 9, 2017.

About 64.0% of the analysts recommend a “buy,” and 36.0% recommend a “hold,” according to Reuters. Changes in analysts’ estimates and recommendations are based on changing trends in the stock price.

To divest the risk, you can consider ETFs such as the iShares Nasdaq Biotech (IBB), which holds 3.8% of its total assets in Mylan.

Advertisement

More From Market Realist