Citi Rates Mylan (MYL) A High Risk Buy

Citi Investment Research & Analysis analysts John Boris, Morten Marott, Timothy W Chou and Nirav Jhaveri maintained their Buy/High Risk rating for shares of Mylan Inc MYL, with a price target of $23 per share. The analysts said that Mylan Inc is currently trading near the bottom of its historical average P/E multiple but that it is also making significant EPS and sales growth. The Citi Investment Research & Analysis analysts wrote, "We arrive at our $23 price target for Mylan based on a relative 2011E P/E multiple compared to the generic pharmaceutical peer group. Mylan currently trades at ~12x our 2011E EPS of $1.83, which is at a discount to the peer group. Our relative P/E valuation assumes Mylan trades at a slight premium to its peer group’s current 2011 P/E multiple, or at ~13x. We base this assessment on the potential in Mylan's geographically diversified generic footprint, its presence in branded specialty pharmaceuticals and the cost advantage of being vertically integrated through Matrix. Through its legacy business, Mylan retains a strong position in the U.S. generic market, the largest in the world. The U.S. generic market, however, is highly competitive and is exposed to price erosion." Shares of Mylan Inc were down nearly 2% at $18.07 per share during the Tuesday morning trading session.