With a daily gain of 0.58% and a 7.14% increase over the past three months, Viatris Inc (VTRS, Financial) has shown a steady performance in the stock market. Boasting an Earnings Per Share (EPS) of $1.51, investors are keenly observing its valuation. The pressing question is: Is Viatris fairly valued? The following analysis aims to shed light on this query and provide a detailed valuation assessment for potential investors.
Company Introduction
Viatris Inc (VTRS, Financial) emerged in November 2020 from the union of Pfizer's Upjohn and Mylan, creating a pharmaceutical giant with a presence in over 165 countries. Viatris focuses on generic and specialty drugs, with approximately 40% of its sales coming from generics and biosimilars, while the remaining 60% stems from legacy products like Lipitor and Viagra. As we compare Viatris's current stock price of $10.45 to the GF Value of $9.82, we aim to provide an in-depth look at the intrinsic value of the company, integrating financial insights with essential company details.
Summarize GF Value
The GF Value is a proprietary measure that reflects the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. When Viatris's stock price is compared to the GF Value Line, it appears to be fairly valued, suggesting that the long-term return of its stock is likely to align with the company's business growth rate. This alignment indicates a balanced investment opportunity for those considering Viatris in their portfolio.
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Financial Strength
Investors should consider a company's financial strength to avoid potential capital loss. Viatris's cash-to-debt ratio of 0.08 places it below many of its peers, indicating a weaker financial position. With a financial strength ranking of 4 out of 10, Viatris's balance sheet could be a concern for investors looking for a secure investment.
Profitability and Growth
Profitable companies, especially those with a history of consistent profitability, present less risk. Viatris, with its 8-year profitability streak, has a solid track record. The company's operating margin of 6.61% is commendable, yet its 3-year average revenue growth rate is below the industry average. This mixed performance in profitability and growth paints a nuanced picture of Viatris's long-term value creation potential.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) helps assess a company's profitability relative to its capital costs. Viatris's ROIC of 1.69 falls short of its WACC of 4.67, suggesting that it may not be creating value for shareholders at an optimal rate. This comparison is a critical factor for investors to consider.
Conclusion
In summary, Viatris (VTRS, Financial) is considered fairly valued with a market cap of $12.50 billion. The company's financial condition is less than ideal, and its profitability is moderate. Its growth ranks lower than many of its industry peers, which may concern investors focused on long-term growth potential. To delve deeper into Viatris's financials, interested parties can review the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
