Daily Traders Edge

Why Wall Street Thinks This Dirt Cheap Value Stock Could Soar

September 13
09:12 2021

Some stocks deliver sizzling gains. Their businesses are exciting. Investors’ buzz about these stocks can be deafening. And then there are stocks like Viatris (NASDAQ:VTRS).

No sizzling gains here. Viatris’ shares have plunged more than 25% year to date. The company makes generic drugs, a relatively boring business. You won’t hear many other investors gush about Viatris. It sometimes seems like no one talks about the stock at all.

However, analysts’ sentiment about Viatris is a lot more positive than you might think. Here’s why Wall Street thinks this dirt cheap value stock could soar.

Nowhere to go but up

The consensus price target for Viatris reflects a 44% premium above its current share price. None of the 13 analysts surveyed by Refinitiv expect that the pharma stock will decline over the next 12 months.

Why does Wall Street have such great expectations for a stock that has admittedly not been a great performer? Analysts probably think that Viatris has nowhere to go but up.

There are only three large-cap stocks that have lower forward earnings multiples than Viatris does right now. Viatris trades at less than four times expected earnings. In other words, Viatris could theoretically buy back all of its shares by mid-2025 if it wanted to do so.

To be sure, Viatris is highly unlikely to embark on such a massive stock buyback. The company places a top priority on using its earnings to fund its dividend program and paying down debt instead.

Continue Reading at The Motley Fool

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