Long-established in the Drug Manufacturers industry, Viatris Inc (VTRS, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 1.87%, juxtaposed with a three-month change of 44.21%. However, 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: 5/10
- GF Value rank: 1/10
- Momentum rank: 8/10
Based on the above method, GuruFocus assigned Viatris Inc a GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding Viatris Inc's Business
Viatris Inc, with a market cap of $15.66 billion and sales of $15.46 billion, is a formidable 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 pharmaceutical manufacturer focusing on generic and specialty drugs. As one of the largest generic drug manufacturers in the world, Viatris Inc services over 165 countries. Its portfolio is diverse, with generics and biosimilars accounting for roughly 40% of total sales, while the remaining 60% comes from legacy products like Lipitor, Norvasc, Lyrica, and Viagra. Viatris Inc has identified dermatology, ophthalmology, and gastroenterology as key focus areas for future innovation, reflecting its strategic approach to growth.
Financial Strength Breakdown
Viatris Inc's financial strength indicators present some concerning insights about the company's balance sheet health. An interest coverage ratio of 1.76 positions it worse than 87% of 677 companies in the Drug Manufacturers industry, signaling potential challenges in managing interest expenses on debt. The company's Altman Z-Score of just 1.13, which falls below the distress zone threshold of 1.81, suggests a risk of financial distress in the near future. Furthermore, the low cash-to-debt ratio of 0.08 indicates a struggle in handling existing debt levels, which could impede the company's financial agility and growth prospects.
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 consider these factors when evaluating the company's future prospects. For those seeking to find more companies with strong GF Scores, GuruFocus Premium members can use the following screener link: GF Score Screen.
As Viatris Inc navigates the complexities of the pharmaceutical industry, will it be able to overcome these financial challenges and harness its strategic focus areas to drive growth? Or will the weight of its financial obligations and competitive pressures hinder its ability to outperform? These are critical questions for value investors to ponder as they assess the viability of Viatris Inc as a long-term investment.
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.
