Long-established in the Drug Manufacturers industry, Viatris Inc (VTRS, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 1.63%, juxtaposed with a three-month change of 7.78%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Viatris Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 6/10
- Growth rank: 3/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned Viatris Inc the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Viatris Inc's Business
Viatris Inc (VTRS, Financial), with a market cap of $14.41 billion and sales of $15.43 billion, is a prominent player in the pharmaceutical industry. The company was formed in November 2020 through the combination of Upjohn, a Pfizer subsidiary specializing in off-patent drugs, and Mylan, a global pharmaceutical manufacturer. Viatris Inc now stands as one of the largest generic drug manufacturers in the world, servicing over 165 countries. Its portfolio is diverse, with generics and biosimilars accounting for roughly 40% of total sales, while the remaining 60% comes from legacy products like Lipitor and Viagra. The company's focus on dermatology, ophthalmology, and gastroenterology positions it for potential innovation in these areas.
Financial Strength Breakdown
Viatris Inc's financial strength indicators present some concerning insights about the company's balance sheet health. Its interest coverage ratio of 1.72 is lower than 85.8% of its industry peers, signaling potential difficulties in managing interest expenses. The Altman Z-Score of just 0.96 falls below the distress threshold, indicating a risk of financial distress. Furthermore, the company's cash-to-debt ratio at 0.06 and a debt-to-Ebitda ratio of 5.22, which is above the cautionary level set by Joel Tillinghast, suggest that Viatris Inc may struggle with its current debt levels.
Growth Prospects
The company's growth trajectory is also a concern. Viatris Inc's Growth rank is low, with a -13.7% annual revenue decline over the past three years, underperforming 87.53% of its industry counterparts. The negative three-year EBITDA growth rate of -4.2 and a five-year rate of -8.8 further highlight profitability challenges. Additionally, a one-star predictability rank adds to the uncertainty regarding the company's revenue and earnings consistency.
Conclusion: Viatris Inc's Road Ahead
Considering Viatris Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. The company's challenges in managing debt, declining revenue, and uncertain earnings trajectory may hinder its ability to outperform in the competitive pharmaceutical industry. Investors seeking companies with stronger financial health and growth prospects can explore options using the GF Score Screen provided by GuruFocus. As Viatris Inc navigates its future, will it be able to overcome these obstacles, or will it continue to struggle against the tides of change?
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.
