VTRS - Where Will Viatris Be in 5 Years?
2023-08-18 07:45:00 ET
Viatris (NASDAQ: VTRS) hasn't made for a particularly great investment since it formed nearly three years ago, through a merger of Mylan and Pfizer 's Upjohn business. Down 29% since then, it has been an underwhelming healthcare stock, to say the least. But where could the company be five years from now, and is this an underrated investment to add to your portfolio today?
A big reason investors aren't overly thrilled with Viatris is that the business has a lot of debt on its books; that's not a good look as interest rates are rising. As of June 30, the company's long-term debt was over $17.2 billion. That's a concerning number when the company's current assets total less than $10 billion.
Viatris has prioritized paying down its debt, and says that over the past 10 quarters its debt repayments have totaled $6.1 billion. The company is targeting a gross leverage ratio of 3.0. Gross leverage compares gross to debt to adjusted earnings before interest, taxes, depreciation, and amortization ( EBITDA ). Currently, the ratio is at 3.4. To get it down to 3.0, based on its current adjusted EBITDA, Viatris would need to pay down another $2 billion in debt.
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Where Will Viatris Be in 5 Years?