Simple Concepts Research Group

Did Investors Bail On Viatris (NASDAQ: VTRS) Too Soon?

by | Apr 19, 2022 | 52 Week Lows, Stock Picks

viatris vtrs stock valuation

Viatris (VTRS) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Viatris (VTRS) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Viatris Fundamentals

VTRS Stock Rating

Stock Price Target: $18.44

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Viatris in comparison to the Pharmaceutical industry and the S&P 500.

Viatris is a Mid-Cap company with a Market Cap of $12.9B.

How are investors using Viatris earnings yield to assess the company?

Viatris (VTRS)_ Earnings Yield in Comparison to the Pharmaceutical Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Viatris is 12.67%, in comparison to 4.50% for the S&P 500 and 2.83% for the 10-year treasury bond. The median earnings yield for the Pharmaceutical industry is 7.31%.

What does Viatris Price-to-Earnings Ratio (P/E) tell investors about the company?

Viatris (VTRS)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Pharmaceutical Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Viatris does not currently have a reported P/E. The P/E for the Pharmaceutical industry is 20.68 and the P/E for the S&P 500 is 22.20.

What is the current Price-to-Sales Ratio (P/S) for Viatris?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Viatris is currently trading at a P/S of 0.74. The P/S for the Pharmaceutical industry is 4.75 and the P/S for the S&P 500 is 2.80.

How does Viatris Price-to-BookRatio (P/B) compare to the Pharmaceutical industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Viatris P/B ratio is 0.64. The P/B for the Pharmaceutical industry is 5.43 and the P/B for the S&P 500 is 4.36.

How attractive is Viatris Return on Invested Capital (ROIC) to investors?

Viatris (VTRS)_ Return on Invested Capital in Comparison to the Pharmaceutical Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Viatris ROIC is currently -2.95% in comparison to 21.25% for the Pharmaceutical industry and 9.10% for the S&P 500.

Viatris (VTRS)_ Price Target & 52-Week Price Range

How has VTRS stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Viatris has traded between the range of $9.66 and $16.29.

The current Analyst Price Target for Viatris is $18.44.

What is Viatris YOY Performance in comparison to its industry and the total market?

The YOY performance for Viatris is -19.17%. The Pharmaceutical industry has a YOY performance of 20.65% in comparison to the YOY S&P 500 performance of 4.93%.

Viatris (VTRS)_ YOY Performance in Comparison to the Pharmaceutical Industry and the S&P 500

Recent Financial Results (Full Year 2021)

  • Net sales totaled $17.81B, down 3% on an operational basis compared to combined adjusted full-year 2020 results, but flat on an operational basis compared to combined LOE adjusted full-year 2020 results, and performed better than expectations, driven by solid performance across Developed Markets, Emerging Markets, JANZ, and Greater China
  • Generated approximately $700M in new product revenues
  • Generated $2.56B of free cash flow, primarily driven by US GAAP net cash provided by operating activities of $3.02B
  • Paid quarterly cash dividends of approximately $400M during 2021

Stock Price Target: $18.44

Company Overview

VTRS Stock Rating

Viatris Inc. operates as a healthcare company worldwide. The company operates in four segments: Developed Markets, Greater China, JANZ, and Emerging Markets. It offers prescription brand drugs, generic drugs, complex generic drugs, biosimilars, and active pharmaceutical ingredients (APIs).

The company has collaboration and licensing agreements with Revance Therapeutics, Inc.; Momenta Pharmaceuticals, Inc.; Theravance Biopharma, Inc.; Biocon Ltd.; and Fujifilm Kyowa Kirin Biologics Co. Ltd. Viatris Inc. was founded in 1961 and is headquartered in Canonsburg, Pennsylvania. The current CEO is Michael Goettler.

Be sure to add Viatris (VTRS) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.