Viatris Earnings: Investors Excited at Steady Progress and New Deal; Fair Value Estimate Raised

No-moat Viatris reported solid third-quarter earnings that were higher than our estimates. Total sales of $3.8 billion were down 4.8% year over year but up 3% on divestiture-adjusted basis and higher than our expected $3.7 billion. Both branded and generic drug portfolio delivered growth on an organic basis, and new products contributed $133 million across segments, well on track to land on the higher end of the full year's guided $500 million-$600 million range. In light of the strong performance, shares surged over 15% at the time of writing, reflecting investors' growing conviction in the resilience of Viatris' base business as well as excitement for future drug launches. We also think a stronger appreciation for solid cash flow generation and debt paydown progress is being baked into the stock price. After inching up our near-term assumptions, we raise our fair value estimate to $14.50 per share from $14.