On the the heels of Mylan NV's (MYL) - Get Reportinvestor day, Leerink Partners LLC analyst Ami Fadia on Thursday, April 12, raised her rating on the drugmaker's stock to outperform from market perform.
Fadia, who maintained her $52 price target, came away from the event "incrementally more positive" on the company's pipeline and its diversified business model, as well as its ability to produce about a 4% top-line and low-double-digit earnings per share compound annual growth rate over the 2018 to 2023 time period and its ability to bolster its balance sheet, according to a note.
"Despite these strengths, Mylan has continued to trade at a 2019E EV/EBITDA of 6.9x," Fadia wrote, pointing out that the valuation is a discount to Mylan's peers such as Teva Pharmaceutical Industries Ltd. (TEVA) - Get Report , which trades at 8.4 times, and more in line with companies such as Endo International plc (ENDP) - Get Report , which trades at 6.6 times.
Fadia wrote in the note that Mylan's diversified business model "remains underappreciated" by investors.
Though Mylan has expanded beyond its roots as a U.S. generics company, Mylan CEO Heather Bresch said at the investor day that she still believes that "we're being valued as a U.S generics company."
Company officials noted that more than 60% of Mylan's revenue comes from outside the U.S. From a product standpoint, generics account for 60%, and the remainder is split between branded drugs and over-the-counter products.
"More importantly, about 50% of Mylan's generic business is outside the U.S., which is not experiencing nearly the same pricing headwinds as the U.S.," Fadia wrote. "Even in the U.S., we expect Mylan's generics business to grow mid-single digits in 2018 as it benefits from the annualization of generic Copaxone 40mg contribution along with new product launches like generic Advair."
Mylan, whose principal executive offices are in Hertfordshire, England, and global headquarters are in Canonsburg, Pa., in October clinched FDA approval for its generic version of Teva multiple sclerosis drug Copaxone.
Shares of Mylan were up 1.1% to $40.82 on Thursday morning. The stock is down 3.5% year-to-date but up 7.3% over the past 12 months.
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