Abbott (ABT, Financial), the U.S. global health care company headquartered in Lake Bluff, Illinois, “confirmed that it sold 44 million shares of Mylan (MYL, Financial) at $41.60 on March 23,” writes StreetInsider.com.
The volume of shares, which represents approximately 40% of the total amount of common shares that Abbott received about two years ago from Mylan N.V. as a final settlement for its branded generic products developed and produced for the developed markets, follows the sale of 40.25 million Mylan common shares by Abbott last year.
Abbott now holds 25.75 million shares of Mylan, or 4.81% of the company’s total shares outstanding of approximately 535.5 million for a market capitalization of $21.85 billion. At the moment, the worldwide medical company headquartered in the U.K. is trading at $40.72 per share with a price-sales (P/S) ratio of 1.97 and a price-book (P/B) ratio of 1.96.
Mylan produces generic and brand-name drugs as well as consumer health care products, thanks to its 50 plants that are located all over the world. The company’s portfolio is well diversified with over 7,500 products that Mylan markets in about 165 countries that are distributed through retailers, health care professionals, hospitals and clinics.
The company closed fiscal year 2016 with revenue coming in at $11.077 billion, a 17.5% increase compared to the same figure in 2015, and cost of sales of $6.38 billion, 22.4% higher than 2015 cost of sales, for a gross profit of $4.697 billion. The company says that the increase in revenue “was principally due to net sales from the acquisitions of Meda, the topicals business and the incremental EPD Business sales.”
2016 total third-party net sales are distributed as follows: 50.82% from North America, 26.7% from Europe and 21.5% from the Rest of the World.
Central Nervous System and Anesthesia with 18.5%, Respiratory 16.5%, Cardiovascular 10.6% and Allergy and Infectious Disease 11.9% are the leading segments.
Mylan closed the last quarter of 2016 with an EPS of $1.57, a 106.6% increase on a year-over-year basis, and beats analysts’ expectations on earnings by 15 cents, generating a positive surprise of 10.60%. Net profit, adjusted to one-time charges, for the whole fiscal year of 2016 was $4.89 per share.
The company has approximately $1.14 billion in cash on hand and securities and a total debt of $15.47 billion as of Dec. 31, 2016. The long-term debt to equity is 136.76 versus an industry average ratio of 8.31. The amount of long-term debt is huge compared to its peers, but the interest coverage ratio is 7.55, indicating that Mylan doesn’t have problems in paying interest expenses on the outstanding debt that is structured in euro and senior notes.
The company believes that the cash flow generated by operations, $2.05 billion in 2016, and available liquidity are enough to meet the company’s needs “for working capital, capital expenditures and interest and principal payments on debt obligations.”
Mylan is seen as a buy by analysts with a recommendation rating of 2.1 and a price target per share of $51.71, which represents a 21.3% upside from the current share price.
Abbott Laboratories is trading at $44.77 with a P/B ratio of 3.21 and a P/S ratio of 3.71.
Disclosure: I have no positions in any stock mentioned in this article.
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