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Deutsche Tweaking Its Mylan View Following CEO's Congressional Testimony

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Deutsche Tweaking Its Mylan View Following CEO's Congressional Testimony

Deutsche Bank trimmed its estimates and target price on Mylan NV (NASDAQ: MYL) shares following CEO Heather Bresch's Congressional testimony over the price hike of EpiPen allergy shots.

Mylan raised the price of EpiPen, which accounts for 40 percent of its operating profits, to $600 for a two-pack from 2007 levels of $50 for a single EpiPen.

"We now assume that MYL launches its authorized generic (AG) by year-end, and takes 75 percent of the brand's volume in 2017 (MYL expects 85 percent at some point)," analyst Gregg Gilbert wrote in a note.

"We assume a net price on the AG of $200 (MYL's estimate; compares to the net on the brand of $274), and a gross margin of 65 percent, which compares to the 75 percent gross margin on the brand implied by MYL's comments (price of $274 and COGS of $69)," Gilbert continued.

Related Link: USA Today On EpiPen Saga: calling It "Controversial" Is Far From Haphazard

Meanwhile, Gilbert still expects additional generic competition from 2018 onward and cut his 2017 EPS view to $5.57 from $5.68.

"Despite what is likely to remain a volatile and headline-heavy period, we are sticking with our Buy rating based on valuation and the premise that MYL will continue to deliver on its globally diverse, vertically-integrated generic business," Gilbert highlighted.

That said, the analyst warned that investors will punish the stock severely if Mylan fails in its core business and/or the newly-acquired Meda business.

In addition, Gilbert trimmed his price target on the stock to $58 from $60.

At time of writing, shares of Mylan fell 1.34 percent to $42.02.

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Latest Ratings for MYL

DateFirmActionFromTo
Jan 2020SVB LeerinkDowngradesOutperformMarket Perform
Jan 2020RBC CapitalMaintainsOutperform
Nov 2019Morgan StanleyDowngradesOverweightEqual-Weight

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