Should You Sell Viatris Shares After Q2 Earnings Missed Revenue Expectations?

  • Viatris published Q2 earnings on Monday.
  • Total revenue declined by 10% year-on-year.
  • Viatris lowered its FY22 revenue outlook.

Viatris Inc. announced its 2nd quarter earnings on Monday and reduced the 2022 fiscal year revenue outlook. CEO Michael Goettler trusted that Viatris might absorb the foreign exchange rate effect due to massive operational performance.

Q2 Missed Revenue Expectations

Viatris is a global healthcare firm based in America. The company produces & sells various medicines, boasting 1,400 authorized therapeutic molecules.

Though Viatris’ business stays steady, the firm announced weaker than anticipated 2nd quarter earnings this Monday. Total revenue has plunged by 10% year-on-year to $4.12B, whereas GAAP earnings/share stood at $0.26.

Net sales from emerging and developed markets lost 25% Y/Y and 6% Y/Y to $650.9M and $2.5 billion, whereas China’s sales remained stable at $548.3 compared to 2021 Q2. Overall revenue has slumped beyond expectations – -$60 million – and the firm reduced the 2022 financial year revenue guidance.

Viatris expects overall revenue to range between $16.2 billion and $17.7 billion, whereas the prior projection place revenue between $17B and $17.5 billion.

Meanwhile, CFO Sanjeev Narula stated that the revised guidance considers foreign exchange effect through the year’s first half and nearly $600M, divided evenly between Q3 and Q4 2022. They expect Influvac seasonality in developed markets and new products like lenalidomide to drive revenue.

Meanwhile, the firm’s management remained enticed by the Q2 performance and expected to ensure consistent and steady performance during the upcoming quarters. The staff forecasts the FY22 adjusted EBITDA at $5.8B – $6.2B and free cash flow at 42.5 billion – $2.9 billion.

Viatris’s CEO stated that the company paid around $1.5B in debt in 2022 first half and targets to repay about $2B this year. Nevertheless, the firm’s balance sheet remains steady, with the present dividend yield at about 4%, and VTRS might ensure impressive returns in the long term.

Technical Analysis

Viatris stocks gained around 14% since this month started, trading at $11.13 during this publication. A hike beyond 412 will signal ‘trade’ and open the path to $13. However, losing the stable support at $10 would reveal a ‘sell’ sign, triggering a drop to $9.