Long-established in the Drug Manufacturers industry, Viatris Inc (VTRS, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 2.35%, juxtaposed with a three-month change of 17.22%. 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: 7/10
Based on the above method, GuruFocus assigned Viatris Inc the GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding Viatris Inc Business
Viatris Inc was formed in November 2020 through the combination of Upjohn, a wholly owned subsidiary of Pfizer that specialized in off-patent drugs, and Mylan, a global pharmaceutical manufacturer that focused on generic and specialty drugs. By joining forces, Viatris became one of the largest generic drug manufacturers in the world, servicing over 165 countries. Generics (commoditized and complex) and biosimilars make up roughly 40% of Viatris' total sales. Remaining 60% of sales is derived from its portfolio of legacy products which includes Lipitor, Norvasc, Lyrica, and Viagra. While it covers more than 10 major therapeutic areas, Viatris has identified dermatology, ophthalmology, and gastroenterology as its three key areas of focus for future innovations.
Financial Strength Breakdown
Viatris Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 0.68, which positions it worse than 95.58% of 656 companies in the Drug Manufacturers industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Additionally, the company's Altman Z-Score is just 0.93, which is below the distress zone of 1.81, suggesting that the company may face financial distress over the next few years. Furthermore, the company's low cash-to-debt ratio at 0.07 indicates a struggle in handling existing debt levels. The company's debt-to-Ebitda ratio is 6.37, which is above Joel Tillinghast's warning level of 4 and is worse than 84.76% of 656 companies in the Drug Manufacturers industry.
Growth Prospects
A lack of significant growth is another area where Viatris Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -13.7 per year over the past three years, which underperforms worse than 87.05% of 911 companies in the Drug Manufacturers industry. Stagnating revenues may pose concerns in a fast-evolving market. Over the past five years, Viatris Inc has witnessed a decline in its earnings before interest, taxes, depreciation, and amortization (EBITDA). The three-year growth rate is recorded at -4.2, while the five-year growth rate is at -8.8. These figures underscore potential challenges in the company's profitability. Lastly, Viatris Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Considering Viatris Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust opportunities may explore other companies with stronger GF Scores using the following screener link: GF Score Screen.
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.
