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Are Mayne Pharma shares in the bargain bin?

The Mayne Pharma Group Ltd (ASX: MYX) share price slumped 1.18% lower to a new 52-week low in yesterday’s trade.

Shares in the Aussie pharmaceuticals group have been trending lower in the last 12 months to just $0.42 per share.

But will Mayne Pharma shares continue to drop, or is now the time to pick the stock up for a steal?

Why Mayne Pharma shares have slumped lower

It’s been a rough 12 months for shareholders in the Aussie pharmaceuticals group who have seen their holdings fall 49.40% over that time.

A disappointing FY19 hurt the Mayne Pharma share price and set the stock on its downwards path.

The group reported a 1% decline in revenue to $525.2 million and a 4% drop in reported earnings before interest, tax, depreciation and amortisation to $111.6 million for the financial year.

Mayne Pharma recorded a net loss after tax of $280.8 million with a huge $351.7 million non-cash impairment on intangibles hurting profits.

While investors were hoping for a turnaround in fortunes, FY20 got off to a disappointing start. Mayne Pharma reported a 16% drop in revenue in the first 4 months compared to the previous year.

That sent Mayne Pharma shares falling even lower to close out the year and towards the current $0.42 mark.

Are the group’s shares a bargain buy?

The Aussie pharmaceuticals group is set to report its half-year results for FY20 on 21 February. Given where Mayne Pharma shares are trading right now, I think that’s a date to mark in your diaries.

A turnaround in earnings and a strong research and development pipeline could be key. The 4-month update at the annual general meeting doesn’t bode well for the February results. However, the group’s shares could also be oversold based on overly negative sentiment in recent months.

If the group can show signs of a turnaround in February, I think the current $0.42 valuation could be an absolute bargain buy.

Personally, I’d prefer to get pharmaceuticals exposure from blue chips like CSL Limited (ASX: CSL) with a strong earnings profile.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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.

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