Should I invest in Viatris shares after the current dip?

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Viatris Inc. (NASDAQ: VTRS) shares have weakened from $10.20 to $8.42 since September 12, 2022, and the current price stands at $8.74.

The U.S. stock market remains under pressure, and going forward, it will be hypersensitive to any FED comments.

The dividend yield is above 5% at the current share price

Viatris is an American global healthcare company that produces and sells a variety of medicines, with 1,400 approved therapeutic molecules in its portfolio.

Even though the company’s business remains stable, the share price of Viatris collapsed last month to a new 14-year low of $8.42.

The current share price stands at $8.74, which is attractively valued based on its earnings, future prospects, and dividend.

Last fiscal year, Viatris increased its total revenues by approximately 50%, rising from $11,81 billion in the 2020 fiscal year to $17,81 billion in the 2021 fiscal year. The situation with EBITDA was even better, which has increased from $2,65 billion in the 2020 fiscal year to $6.18 billion in the 2021 fiscal year.

For the 2022 fiscal year, Viatris expects total revenue to be in a range between $16.2 billion – $16.7 billion, while the adjusted EBITDA should be between $5.8 billion to $6.2 billion. Michael Goettler, CEO of Viatris, said:

We’ve shown that now with six quarters of very solid, strong performance quarter-after-quarter consecutively. We’re no longer dependent on what happened to one product or one part of the business, anywhere in the world, we have waste offset.

Viatris has a business that’s extremely diversified, with over 3,000 products, brands, generics, complex generics, and biosimilars for the time being, which gives the company resilience in a time of global uncertainty.

Positive information is that the board of directors declared a $0.12/quarterly share dividend again in August, which gives investors a dividend yield above 5% at the current share price.

With a market capitalization of $11.13 billion, Viatris is undervalued, and compared to Gilead Sciences, Inc. (NASDAQ: GILD), Viatris is cheaper on a price-to-sales basis.

According price-to-sales ratio (market capitalization/revenues), Viatris shares are trading at 0.64, which is several times lower than the price-to-sales ratio of Gilead Sciences, which is trading at a P/S of 2.96.

It is also important to mention that Pfizer Inc. (NYSE: PFE) trades at more than two this year’s sales and more than five times TTM EBITDA. Viatris trades at less than two times TTM EBITDA, the book value per share is above $15, and for investors looking for attractive and reliable dividends, this stock may be a good choice.

$8 represents the current support level

Viatris shares have weakened from $10.20 to $8.42 since September 12, 2022, and the current price stands at $8.74.

The price has moved again below the 10-day moving average, indicating that the bottom is still not reached. Despite this, shares of this company could provide strong returns for long-term investors.

Data source: tradingview.com

The current support level stands at $8, while $10 represents the first resistance level. If the price falls below $8, it would be a “sell” signal, and we have the open way to $7.5 or even below. Conversely, if the price jumps above $10, the next target could be $11.

Summary

Viatris trades at less than two times TTM EBITDA, the book value per share is above $15, and for investors looking for attractive and reliable dividends, this stock may be a good choice. The dividend yield is above 5% at the current share price, and with a market capitalization of $11.13 billion, Viatris is undervalued.

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