Generic-drug maker Viatris (VTRS) initiated a dividend on Monday, but VTRS stock plummeted after the company issued a downbeat 2021 outlook.
For the full year, Viatris expects $17.2 billion to $17.8 billion in sales. That came in well below the average analyst estimate for $18.4 billion, SVB Leerink analyst Ami Fadia said in a report to clients.
Viatris also called for $6 billion to $6.4 billion in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, and expects free cash flow to come in at $2 billion to $2.3 billion. Both measures missed analyst forecasts for $7.2 billion and $3.8 billion, respectively.
The earnings and cash flow miss likely disappointed investors in VTRS stock, Fadia said.
“We believe the magnitude of the miss, particularly on EBITDA and (free cash flow), was not anticipated and we expect the stock to trade lower today,” she said.
VTRS Stock Plummets On Guidance Miss
On today’s stock market, VTRS stock tumbled 14.9% to 15.50. That put shares at their lowest point since November.
Viatris is the combination of Mylan, maker of generic drugs and EpiPen emergency allergic reaction injection, and Pfizer‘s (PFE) older drugs business called Upjohn. Analysts anticipated the guidance, Viatris’ first outlook following the merger.
Viatris Chief Executive Michael Goettler called 2021 the company’s “trough year.”
“We are confident that our financial guidance for 2021 is the right starting point for Viatris and continue to expect 2021 to be our trough year in terms of revenue, adjusted EBITDA and free cash flow, reflecting a balanced view of both near-term tailwinds and headwinds, particularly given the delay in closing the combination between Mylan and Pfizer’s Upjohn business,” he said in a written statement.
Generic-Drug Maker Initiates Dividend
More bullishly for VTRS stock investors, the company announced an annualized dividend of 44 cents. Due to the timing of the dividend initiation, the company expects to make three payments in 2021, totaling $400 million. It plans to declare the first 11-cent payment in May and pay it in June.
Check out the best dividend stocks.
Still, VTRS stock tumbled on the news. Shares fell below the bottom line of a flat base with a buy point at 18.96, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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