Viatris (VTRS) Stock Pops 17% on Acquisition News
Source: Postmodern Studio / Shutterstock.com
Viatris (NASDAQ:VTRS) issued a press release today with a slew of good news. For one thing, Viatris is acquiring two different businesses. Also, these acquisitions are expected to greatly enhance the company’s financials. Plus, VTRS stock traders are excited because Viatris is preparing to execute its share repurchase program.
Based in Pennsylvania, Viatris delivers medicines to patients in over 165 countries and territories. The company’s product portfolio includes more than 1,400 “approved molecules” and often focuses on infectious diseases.
Suffice it to say that Viatris delivered a whopper of a press release this morning. To begin, the company is getting ready to start its share buyback program, and “expects [the] combination of acquisitions and share repurchases to be accretive to adjusted EPS in 2023 on a standalone basis.”
That’s a great start, but really it’s just the warm-up. Viatris also disclosed its intended upcoming acquisitions of two separate companies. One of them is Oyster Point Pharma (NASDAQ:OYST), which has “deep knowledge of the ophthalmology space.” Viatris also plans to acquire Famy Life Sciences, which “has a complementary ophthalmology portfolio.”
What’s Happening With VTRS Stock?
On the heels of these developments, VTRS stock gapped up this morning on unusually heavy trading volume. The shares moved 10% higher and even 15% higher at one point.
This might seem counterintuitive, since it’s normal for a stock to initially lose value when a company makes one or more acquisitions. After all, it costs a lot of money to buy out a business (or two, in this instance).
However, investors seem to be on board with Viatris’s ambitious forecasts. Specifically, the company anticipates that the two aforementioned acquisitions could potentially add at least $1 billion in net sales. Additionally, Viatris expects that the acquisitions could add a minimum of $500 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by 2028.
In other words, these could be value-added purchases if everything goes according to plan. That remains to be seen, but for the time being, many traders are placing their bets with long positions in VTRS stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.