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Will This Upgrade Help Mylan (MYL) Stock Today?

Stocks in this article: MYLC

NEW YORK (TheStreet) -- Mylan Inc (MYL) shares were upgraded to "buy" from "neutral" by Citigroup  (C) on Friday. The firm raised the company's price target to $61 from $52.

Mylan is up 5.6% to $52.67 in early trading Friday.

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The upgrade comes on the heels of the news that Mylan is set to acquire Swedish drug manufacturer Meda AB in a mostly stock deal. However, news broke Friday morning that Meda's board has rejected the takeover bid.

"We had previously cited Mylan as one of the companies in the spec pharma/generics space most likely to benefit from a potential tax inversion transaction. We are raising our TP to $61 and upgrading the stock to Buy in order to reflect the potential operational and tax synergies from this strategic partnership," the note said.

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Separately, TheStreet Ratings team rates MYLAN INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MYLAN INC (MYL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MYL's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MYLAN INC has improved earnings per share by 15.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MYLAN INC increased its bottom line by earning $1.58 versus $1.53 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $1.58).
  • Net operating cash flow has increased to $417.86 million or 40.84% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.08%.
  • The gross profit margin for MYLAN INC is rather high; currently it is at 53.41%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.96% trails the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 69.03% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: MYL Ratings Report
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