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Forzberg in Igor,

Investment idea - Mylan

Mylan is a global generic and specialty pharmaceuticals company. The company operates an active pharmaceutical ingredient manufacturer and runs a specialty business focused on respiratory, allergy, and psychiatric therapies.

Mylan’s 3Q13 results were solid demonstrating strong performance across the company’s global platform. Driven by strong margins and cost control, EPS of $0.82 was above both consensus estimate and the upper end of management’s guidance range. The company narrowed its 2013 guidance calling for EPS of $2.8-2.9 (in line with forecasts) and reaffirmed the 2014 financial targets of 12% growth in revenue and 19% growth in EPS. Besides, Mylan announced a $500 mn share repurchase plan.

The company’s advantage is a highly diversified business that, we believe, is capable of delivering two-digit EPS growth over the next several years. In our view, Mylan is solidly positioned to take advantage of attractive international opportunities and realize significant cost synergies from its global infrastructure when pursuing potential business development transactions. Additionally, we believe, the company’s investment in R&D for high-barrier generics, injectables and biosimilars positions Mylan for a superior growth profile vs. most of its generic peers.

Mylan currently trades at roughly 11x 2015E EPS, which is below the company’s generic pharmaceutical peers although its growth prospects look better. So we see a strong case for multiple expansion and consider buying Mylan’s shares an interesting medium term investment opportunity, with target price of $50.