Morgan Stanley: As Generic Competitors Falter, Mylan Is Worth A Shot

After two years on the sidelines, Morgan Stanley is taking a more bullish bet on Mylan NV MYL. A Tuesday upgrade boosted Mylan's ratings ratio to 13 Buys and seven Holds.

The Rating

Analyst David Risinger raised Mylan from Equal-weight to Overweight and increased the price target from $39 to $50.

The Thesis

Notably, Mylan is now Morgan Stanley’s only Overweight generic drugs stock.

The company recently received regulatory approval for the first of 18 biosimilar candidates, and Risinger said he anticipates increasing market enthusiasm for the pipeline.

“We view Mylan as the best-positioned U.S. generics company to capitalize on biosimilars via its industry-leading partnerships with Biocon and Momenta Pharmaceuticals, Inc. MNTA,” Risinger said in a Tuesday note “Biosimilars are often high value, limited competition opportunities.”

The rest of the firm’s portfolio compares favorably with those of peers, and Risinger said he sees opportunity to gain U.S. generics market share as competitors endure instability.

Teva Pharmaceutical Industries Ltd (ADR) TEVA is restructuring and reducing its workforce; Sandoz Inc is selling its oral generics unit; and Apotex Inc is suffering leadership challenges, according to Morgan Stanley. 

Amid these circumstances, Risinger said he Mylan’s stock growth to accelerate from 12 percent to 24 percent in the second half of 2018, driven in part by the potential approval of generic Advair and biosimilar Neulasta.

Price Action

Mylan shares were up more than 5 percent at $43.64 in Tuesday morning trading. 

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