The government’s focus on Mylan’s (MYL) Epipen pricing may overshadow any good news stemming from its quarterly report due this Wednesday after the market closes. The expectations are low. Earnings are expected to fall nearly 31.5 percent this year, but rebound with growth of 15.33 percent next year. At a 6.3x forward P/E, will Mylan’s quarter reverse the stock’s moves towards yearly lows?
Mylan previously settled a $465 million fine with the DOJ regarding the Epipen price hikes. Unfortunately, West Virginia’s attorney general wants the DOJ to reject that deal. Look for management to address this during the conference call. Mylan may need to book higher losses on expectations of a higher fine. The DOJ is not making things easy. If the Bloomberg report is accurate, the DOJ may go after generic drugmakers. Even strong quarterly revenue for Mylan may not help the stock. Management may lower its outlook for this year and next, if charges are coming.
Fortunately for investors, the chances of the DOJ proving drug firms are colluding are slim. Management for Mylan and others, including Teva (TEVA) or Endo International (ENDP) are unlikely to talk to each other about drug prices.
Teva’s expected earnings of $6.00 to $6.50 per share in 2017 values the stock at around 5x earnings. The stock is cheap.
