Why VTRS may not be such a healthy option for dividend investors
Viatris Inc (NASDAQ:VTRS) is up 0.5% to trade at $10.94 at last check. Just last week, the company announced the U.S. Court of Appeals denied a request from Biogen (BIIB) to reconsider its decision affirming the invalidity of its U.S. Patent No. 8,399,514, which allows Viatris' subsidiary, Mylan Pharmaceuticals, to maintain its Tecfidera product.
The security has experienced its fair share of volatility over the past 12 months. In late February, a massive bear gap pushed the shares to a March 14, roughly 12-year low of $9.66. VTRS has since moved higher, but the $11.10 area appears to be emerging as a potential resistance level. Longer term, Viatris stock is down 21.9% year-over-year.
The options pits lean bullish towards VTRS. This is per the security's Schaeffer's put/call options ratio (SOIR), which sits higher than just 8% of annual readings, indicating these traders have been quite call-biased of late.
Digging deeper, the pharmaceutical company provides a very intriguing dividend yield of 4.42%, with forward dividend of $0.48. In addition, Viatris stock offers a strong valuation, currently trading at a forward price-earnings ratio of 3.10, and a price-sales ratio of 0.74.
VTRS' fundamentals are not as attractive, however, due to its lack of consistency and stability. For example, Viatris holds an abysmal balance sheet with $23.35 billion in total debt, and only $706.2 million in cash. Plus, the pharmaceutical name is estimated see a 0.6% decrease in earnings, and a 2.4% dip in revenues for 2022.
Overall, Viatris stock's ’ long-term outlook is too uncertain for dividend investors to be encouraged by its current value, making VTRS better suited for short-term investors looking to profit from its very low valuation metrics.