Citi says that Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) will have to make "at least one multi-billion dollar acquisition to achieve its goals" to double revenue to $20 billion by 2012.
Citi notes, "Teva has a history of sustained growth and shareholder value creation, lending credibility to its targets." Citi adds, however, "We believe that Teva will need to rely on significant M&S to achieve its foals. Management characterized its targets as needing only organic growth and a few small 'complementary' acquisitions of no more than a few hundred million dollars each."
Citi says, "Given Teva's successful M&A track record with multi-billion dollar deals like Sicor and Ivax, we are not necessarily against another large deal, assuming the strategic rationale is solid. But while such a deal could even allow Teva to exceed its targets, we acknowledge that the general investor skepticism toward such deals pose an overhand on Teva's shares."
Citi therefore has reiterated its forecasts for Teva, based on consistent organic growth, at a net profit of $3.45 billion on $13.3 billion revenue in 2012. Teva would need to acquired a business that could contribute $7.6 billion revenue and $600 million profit to achieve the company's target.
Citi concludes, "If Teva seeks to ensure that the goals it has announced are met, it could be looking to make a significant acquisition sooner than some investors expect."
Published by Globes [online], Israel business news - www.globes-online.com - on February 24, 2008
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