NEW YORK (TheStreet) -- Mylan (MYL - Get Report) shares are up 1.7% to $52.09 on Tuesday after Bank of America (BAC - Get Report) analysts reiterated its "buy" rating on the stock and raised its price target to $67 from $62.
That followed the announcement of the biotech company's $5.3 billion purchase of Abbott Laboratories' (ABT - Get Report) generic brand medicine portfolio.
"This deal makes strategic sense to us as it further diversifies MYL's revenue base (product mix, geography) and also affords MYL the ability to pursue additional business development in a more efficient tax structure; the company will re-domicile ("tax inversion") in the Netherlands on closing," said Bank of America analysts.
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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 few notable 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 increase in net income. 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:
- The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 5.2%. 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 7.4% 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 year. 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 ($3.40 versus $1.58).
- Net operating cash flow has significantly increased by 206.18% to $268.10 million when compared to the same quarter last year. In addition, MYLAN INC has also vastly surpassed the industry average cash flow growth rate of 10.91%.
- The gross profit margin for MYLAN INC is rather high; currently it is at 52.51%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MYL's net profit margin of 6.75% significantly 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 62.10% 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