Mylan N.V. (NASDAQ:MYL) – Overreaction or Genuine Growth?

Mylan N.V. (NASDAQ:MYL) soared after the FDA approved the company’s generic version of a multiple sclerosis treatment Copaxone. Copaxone is manufactured and sold by Mylan’s rival Teva Pharmaceuticals. Multiple sclerosis is a chronic nervous system condition. About 400,000 people in the US have MS. Investors also cheered FDA’s announcement that it would speed up the process of bringing approval for generic drugs to the market.

Teva’s Copaxone is one of the best-selling drugs. In the second quarter, multiple sclerosis generated about $1 billion of revenue for Teva. Copaxone’s generic approval is excellent news for Mylan in every sense. But some analysts think that the market may be overreacting to the FDA approval news. Wells Fargo analyst David Maris recently said in an interview with CNBC that taking a look at “simple math” tells that the market is overly optimistic regarding the latest FDA approval for MS drug for Mylan. The analysts said that even in the best case scenario, Copaxone’s generic version will add $0.13 EPS per quarter for the company. Maris said that the overreaction is the result of the changing dynamics of the pharmaceutical industry, where getting approvals for generic drugs is becoming close to impossible.

Mylan N.V. (MYL) is operating in the tough market of biosimilars and generics. But analysts think that the company has bright prospects because the US government wants to put a cap on drug prices and increase availability of affordable drugs. Mylan is known for producing generic, affordable versions of expensive drugs. Earlier this month, Mylan launched a generic version of Merck’s CANCIDAS, an antifungal treatment.

Mylan N.V. (MYL) has 225 pending approvals. These drugs, if approved, have the potential of $92.5 billion in annual brand sales.

source:http://files.shareholder.com/downloads/ABEA-2LQZGT/5325360035x0x930884/D52E50C4-C039-43B7-B7B5-0F6DC1E76407/Mylan_Investor_Day_2017.pdf

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JPMorgan analyst recently raised its price target for Mylan and reiterated its Overweight rating for the stock. BTIG Research is also bullish on the stock, with a $45 price target.