Why the Mayne Pharma Group Ltd (ASX:MYX) share price has sunk lower today

The Mayne Pharma Group Ltd (ASX:MYX) share price has sunk lower on the day of its AGM despite revealing an impressive start to the year…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Mayne Pharma Group Ltd (ASX: MYX) share price has certainly had an eventful day.

At the time of writing the pharmaceutical company's shares are down almost 6% to 98 cents, whereas in early trade its shares were up as much 5%.

What happened?

This morning Mayne Pharma is holding its annual general meeting. Ahead of the event the company released its annual general meeting speeches to the market which included an update for the first four months of FY 2019.

According to the release, Mayne Pharma has had a positive start to FY 2019. Group revenue at the end of October was up 21% on the prior corresponding period to $183 million. This was driven by growth in all four of its operating segments.

Pleasingly, the company's gross profit has grown at even quicker rate. During the four months it achieved a 75% increase in gross profit compared to the prior corresponding period to $108 million.

Mayne Pharma saw its gross profit margin lift to 59% during the period thanks to a greater contribution from its high margin Specialty Brands segment, cost savings from bringing manufacturing in-house, favourable product sales mix in generics, and normalised levels of stock obsolescence and Doryx returns.

So why are its shares sinking lower?

Mayne Pharma has undoubtedly had a strong start to FY 2019. However, neither the CEO nor the chairman provided any comments on expectations for the full year.

As a result, I suspect that the lack of any guidance has spooked investors and sent some to the exits.

Should you buy the dip?

If the company can continue this form through to the second half of FY 2019 then I think Mayne Pharma's shares could prove to be a great investment option.

However, it might be worth holding out until the release of its half year results early next year to see if this level of performance has been sustained.

In the meantime, I think CSL Limited (ASX: CSL) and Telix Pharmaceuticals Ltd (ASX: TLX) could be worth a closer look.

Motley Fool contributor James Mickleboro owns shares of TELIXPHARM DEF SET. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
Share Fallers

Why Bell Financial, IPD, Megaport, and Resolute Mining shares are falling today

These shares are starting the week in the red. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Megaport, Pilbara Minerals, Vysarn, and WiseTech shares are falling today

These shares are ending the week in the red. But why?

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Accent, Sayona Mining, Web Travel, and Weebit Nano shares are dropping today

These shares are having a tough time on Thursday. Why are they being sold off?

Read more »

A smartly-dressed man screams to the sky in a trendy office.
Share Fallers

Why Appen, DroneShield, PWR, and Webjet shares are sinking today

These shares are having a tough time on hump day. But why?

Read more »

a car driver sits up and looks alert with wide eyes and an expression of concentration while he holds the wheel of a car.
Share Fallers

Why this ASX All Ordinaries stock just crashed 24%!

Investors are punishing the ASX All Ords company today. Let’s find out why.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Elders, KMD, Lovisa, and Telix shares are dropping today

These shares are missing out on the good times on Tuesday. But why?

Read more »

A woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason today
Share Fallers

Why Life360, Lovisa, NAB, and Resolute shares are falling today

These shares are starting the week in the red. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Healthcare Shares

This ASX All Ords share is diving 18% as inflation pain draws blood

This healthcare company delivered a trading update at its annual general meeting today.

Read more »