At the Mylan ( MYL) annual meeting in late July, Chairman Milan Puskar had a simple message for shareholders: "Keep the faith."

In the two months before the meeting and in the four months following it, shareholders of the generic drugmaker have had their own message: "Sell the stock."

Recently, Mylan's shares have dropped to levels not seen in more than five years on a split-adjusted basis, hitting an intraday low of $12.93 on Nov. 21. It closed at $13.61 on Nov. 23, and is down 39% since early May. Earlier this month, major bond-rating firms cut their credit ratings, pushing Mylan deeper into junk-bond territory.

Mylan makes the bond guys nervous and the equity guys jittery over its $6.8 billion purchase in October of the generic-drug division of Merck KGaA, the German drug and chemical conglomerate.

Analysts like the fact that Mylan is now the world's third-largest generic-drugmaker by sales, significantly expanding its size and geographic scope to compete with industry leaders Teva Pharmaceutical Industries ( TEVA) and the Sandoz division of Novartis ( NVS).

But many also believe Mylan paid too much and assumed too much debt. They worry that Mylan lacks managerial experience for dealing with a sprawling enterprise spread over several continents.

"We see Mylan management as the key source of risk for investors," says Aaron Gal, of Sanford C. Bernstein & Co., in a recent report. "We are concerned both about the company's lack of experience in global operations and its spotty track record in driving investor returns."

Mylan has begun hiring top managers from companies with heavy international exposure, such as Pfizer ( PFE) and Sanofi-Aventis ( SNY).

In recent months, outside hires, internal promotions and transfers of Merck executives have produced a new chief operating officer, treasurer, human resources director, chief information officer, chief compliance officer and presidents of three regional operating units.

And despite his concerns about management, Gal raised his rating to outperform from market perform on Nov. 15. "The Mylan business is stronger by being global," he says. Gal doesn't own shares. His firm does and seeks to do business with companies mentioned in research reports.

Gal is one of five equity analysts who have upgraded Mylan since Labor Day, according to Thomson First Call. The Wall Street verdict stands at seven buy recommendations and 10 neutral ratings. Over the last 12 months, Mylan's stock has lagged those of its two biggest U.S. competitors, Barr Pharmaceuticals ( BRL) and Watson Pharmaceuticals ( WPI), as well as Teva.

Back in April, bond analysts told TheStreet.com that just about any generic drugmaker bidding for the Merck KGaA generics unit would face balance-sheet strain.

They noted that Mylan already paid $756 million for 71.5% for the Indian generic-drug company Matrix, closing the deal in January. Mylan used available cash and a revolving credit facility. In March, Mylan sold about $1 billion in convertible notes and common shares, whose uses included "expansion of its global operations."

For the Merck unit, Mylan used bridge loans to help finance the deal. On Nov. 14, it issued $2.89 billion in convertible preferred stock and common stock to help pay off the loans.

Standard & Poor's promptly cut Mylan's corporate credit to BB-minus from BB-plus and the senior-unsecured debt rating to B from BB-plus. The ratings cover $4.85 billion in debt. S&P also gave a B-minus rating to the convertible preferred stock. All of these ratings are below investment grade.

S&P acted because Mylan has a "highly leveraged financial risk profile and because of management's challenges in integrating and running a much larger, internationally focused company. (Mylan once had a minimum investment grade rating of BBB-minus, but S&P lowered it in May after Mylan bid for the Merck division.)

Partially offsetting Mylan's financial burden is the company's new size "in an industry where size and scale are critical," S&P says. The debt strain "will decline steadily, given management's history of financial conservatism."

Moody's Investors Service chimed in with a corporate ratings cut to B1 from Ba1, adding that the outlook is stable. Ba1 is one level below investment grade. A new, secured credit facility earned a B1 rating.

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