(Bloomberg) — Viatris Inc., the new home to drug brands like Zoloft, Lipitor, and Viagra, is the worst-performing stock of the S&P 500 Index so far this year and analysts are urging investors to steer clear.
JPMorgan analyst Chris Schott was the latest to downgrade Viatris’s shares on the lack of catalysts and an uncertain growth trajectory, warning clients that the EpiPen manufacturer’s need to pay off debt will limit its ability to accelerate its expansion over the coming years. Scott’s rating change comes after Wolfe Research analyst Akash Tewari reduced his recommendation last week.
Shares of the recently formed drug company created when Mylan NV merged with Pfizer Inc.’s off-patent medication unit Upjohn, fell 2.9% to a five-month low Tuesday, for a fourth straight decline. A representative for Viatris wasn’t available for comment.
The pharmaceutical company, based outside Pittsburgh, Pennsylvania, has dropped 24% this year, making it the worst performer in the S&P benchmark, just below risk-insights firm Verisk Analytics Inc. The stock’s rout compares to a 3% rise for the broader index while the health-care sector is flat for the year.
Disappointing 2021 guidance in late February was followed by an analyst meeting that failed to impress investors. JPMorgan’s Schott said he expects shares to struggle until the company has shown several quarters of execution under its new vision.
“These initiatives will take time to enact and the baseline earnings power of the company (laid out last week with 2021 guidance) is well below what we and the Street had anticipated,” Schott wrote in his note. “We leave yesterday’s investor day with lingering questions on Viatris’s longer-term outlook.”
With JPMorgan’s downgrade, Viatris has more skeptics than fans on Wall Street: 10 analysts rate it a hold or equivalent and one has an outright sell, compared with nine buy ratings, data compiled by Bloomberg show. However, the average analyst price target of about $20 implies investors who stick with the company could reap a 38% reward over the coming year.
On Friday, Wolfe Research’s Tewari downgraded Viatris to peerperform from outperform, saying the company doesn’t have a compelling growth profile.
(Updates share movement throughout.)
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