Are Mayne Pharma shares in the bargain bin?

Mayne Pharma Group Ltd (ASX: MYX) shares have slumped to a new 52-week low. Is now the time to pick Mayne shares up for a steal?

| 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 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.

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.

More on 52-Week Lows

A man with his back to the camera holds his hands to his head as he looks to a jagged red line trending sharply downward representing the ASX tech share sell-off today
52-Week Lows

3 ASX shares sinking to 52-week lows today

These ASX shares are having a bit of a nightmare this year.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
52-Week Lows

Star Entertainment share price crashes 26% upon return to trade

This is a new 52-week low.

Read more »

Rede arrow on a stock market chart going down.
Materials Shares

Core Lithium and 2 other ASX 200 lithium shares plunging to 52-week lows

Lithium stocks like Core are exploring new lows today.

Read more »

A man looks nervous as he inflates a balloon, scared it might pop.
Materials Shares

Arafura share price resets 52-week low after quarterly update

The rare earths explorer also announced the results of its share purchase plan today.

Read more »

A woman stands at her desk looking a her phone with a panoramic view of the harbour bridge in the windows behind her with work colleagues in the background.
Industrials Shares

APM shares rebound on Friday following 40% thrashing on weaker profit news

The international employment services company was punished for its 1H FY24 update.

Read more »

Piggy bank sinking in water symbolising a record low share price.
52-Week Lows

3 ASX 200 stocks starting the new year at near 52-week lows

Are these stocks buying opportunities?

Read more »

A businesswoman ponders why her boat is sinking in the ocean.
52-Week Lows

Lake Resources share price falls 7% to new 52-week low amid second strike AGM vote

Chair Stu Crow described "a year of significant progress" amid an 80% decline in the share price in 2023.

Read more »

A man sits uncomfortably at his laptop computer in an outdoor location at a table with trees in the background as he clutches the back of his neck with a wincing look on his face.
Materials Shares

Why did the Core Lithium share price just hit a 2-year low?

Top broker Goldman Sachs says falling lithium commodity prices may hit Core Lithium particularly hard.

Read more »