Is Viatris a Buy, Sell, or Hold in a Post-Earnings Recovery Landscape? A Deep Dive into Value Re-Rating Potential Amid Emerging Market Momentum

The pharmaceutical sector has long been a barometer of macroeconomic resilience, and Viatris (VTRS) is emerging as a compelling case study in value re-rating potential. Following its Q3 2025 earnings report, the company has demonstrated a nuanced recovery trajectory, driven by strategic geographic diversification, a robust branded portfolio, and undervalued fundamentals. This analysis evaluates whether Viatris is a buy, sell, or hold in the current landscape, focusing on its earnings momentum, valuation metrics, and competitive positioning in high-growth markets.

Earnings Recovery: Operational Strength Amid Structural Challenges

Viatris reported Q3 2025 revenues of $3.76 billion, a 1% year-over-year decline but a 1% operational increase when excluding the impact of its Indore facility. This distinction is critical: while legacy manufacturing issues and competitive pressures in North America and Japan have dampened headline growth, the company's core operations are showing resilience. Europe, emerging markets, and Greater China-regions where Viatris has strategically expanded its branded drug portfolio-contributed to a 7% and 9% sales increase, respectively.

The company's updated 2025 guidance-revenue of $13.9–$14.3 billion and adjusted EPS of $2.25–$2.35-reflects confidence in its ability to navigate short-term headwinds. Analysts have affirmed this optimism, with Viatris maintaining a Zacks Rank of #2 (Buy) and a median 12-month price target of $12.44. These metrics suggest that while structural challenges persist, operational execution is aligning with long-term growth objectives.

Valuation Metrics: A Case for Undervaluation

Viatris's valuation metrics paint a picture of a company trading well below its intrinsic value. As of November 2025, its P/E ratio of -3.38 and P/B ratio of 0.78 indicate significant undervaluation relative to industry peers. For context, the pharmaceutical sector's average P/S ratio is 5.9x, while Viatris's P/S stands at 1.0x further amplifying the discrepancy. This discrepancy is further amplified by its forward PEG ratio of 0.55, which suggests the stock is priced for minimal growth despite analysts forecasting moderate earnings expansion.

The disconnect between fundamentals and market valuation is underscored by analyst consensus. A fair value estimate of $49.78-far exceeding the current share price of $11.94-highlights a potential re-rating opportunity. While the 12-month price target of $12.44 implies limited near-term upside, the broader valuation gap suggests that market skepticism may be overcorrecting.

Emerging Markets: A Strategic Tailwind

Viatris's geographic diversification strategy is a key differentiator. Emerging markets, including Turkey, Mexico, and parts of Asia, have driven 7% sales growth in Q3 2025, while Greater China outperformed expectations with a 9% increase underpinned by the company's focus on patient-driven brands. This momentum is underpinned by the company's focus on patient-driven brands and specialty therapeutics, which now account for $2.4 billion in annualized revenue according to recent analysis.

However, challenges remain. The "Indore Impact"-a legacy manufacturing issue-has created volatility in emerging markets, and competitive pressures in Japan and North America persist according to investor reports. That said, Viatris's acquisition of Aculis Pharma in Japan and its pipeline advancements (e.g., NDA submissions for meloxicam and a low-dose estrogen patch) position the company to capitalize on long-term demand trends as reported in earnings calls.

Institutional Investor Activity: Mixed Signals

Institutional ownership data reveals a nuanced picture. Large shareholders like Vanguard and T. Rowe Price maintain significant stakes, but BlackRock and State Street have reduced holdings according to recent filings. This divergence reflects broader market uncertainty but also highlights the company's appeal to long-term investors. Viatris's capital return program-$920 million year-to-date with plans to exceed $1 billion in 2025-further strengthens its case as a defensive play in a high-interest-rate environment.

Risks and Considerations

While the valuation case is compelling, risks remain. The Indore facility's impact on supply chain reliability, regulatory hurdles for pipeline assets, and pricing pressures in key markets could delay a re-rating. Additionally, the company's reliance on branded drug growth in emerging markets exposes it to geopolitical and currency risks.

Conclusion: A Buy for Long-Term Value Hunters

Viatris occupies a unique intersection of undervaluation and operational momentum. Its earnings recovery, while not without challenges, is supported by strong branded drug demand in high-growth regions and a pipeline poised for mid-2026 approvals. The valuation gap-particularly relative to peers-suggests a compelling risk/reward profile for investors with a 12–24 month horizon. While short-term volatility is likely, the company's strategic execution and capital discipline make a "buy" recommendation justified, provided investors are prepared to weather near-term uncertainties.