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 0.53%, juxtaposed with a three-month change of 15%. 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: 5/10
Based on the above method, GuruFocus assigned Viatris Inc the GF Score of 66 out of 100, which signals poor future outperformance potential.
Understanding Viatris Inc's Business
Viatris Inc, with a market cap of $13.59 billion and sales of $15.47 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 manufacturer of generic and specialty drugs. As one of the largest generic drug manufacturers globally, Viatris Inc services over 165 countries. Its portfolio is diverse, with generics and biosimilars accounting for approximately 40% of total sales, while the remaining 60% comes from legacy products like Lipitor, Norvasc, Lyrica, and Viagra. Viatris Inc focuses on dermatology, ophthalmology, and gastroenterology for future innovations, reflecting its strategic approach to growth in key therapeutic areas.
Financial Strength Breakdown
Viatris Inc's financial strength indicators present some concerning insights about the company's balance sheet health. With an interest coverage ratio of 1.76, Viatris Inc is positioned worse than 87.67% of 673 companies in the Drug Manufacturers industry. This ratio, which is significantly below the preferred benchmark set by Benjamin Graham, highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Furthermore, the company's Altman Z-Score of just 1.08, which falls below the distress zone threshold of 1.81, suggests that Viatris Inc may face financial distress in the near future. The low cash-to-debt ratio of 0.08 further indicates a struggle in managing existing debt levels.
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 an average of 15.7% per year over the past three years, underperforming 87.95% of 913 companies in the Drug Manufacturers industry. This decline in revenue is a red flag in a market that demands constant innovation and growth. Additionally, Viatris Inc's predictability rank of one star out of five adds to investor uncertainty regarding the consistency of revenue and earnings.
Next Steps
Considering Viatris Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and may want to look for companies with stronger financial health, more robust growth prospects, and higher GF Scores. For those seeking to make informed investment decisions, GuruFocus Premium members can find more companies with strong 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.
