IBI Investment House today downgraded its recommendation for Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) to "Neutral" from "Buy", although it reiterated its target price of $51, a 16.3% premium on yesterday's closing price on Nasdaq.
IBI pointed out that Teva's first quarter financial results included Barr Pharmaceuticals, which Teva acquired. The results show the initial fruits of the acquisition, but also the costs of the merger process and the creation of expected synergy.
IBI notes that Teva's first quarter cash flow fell to $733 million from $746 million for the corresponding quarter of 2008. Despite the decline, the figure is nonetheless an impressive one that reflects Teva's immunity from the recession.
IBI believes that Teva's growth engines are strong and substantial. It believes that the company is now in the refueling stage, and that it will take time before results are seen. This is reflected in the target price's small premium compared with the current share price.
IBI said that investors should take the pharmaceutical sector's defensive character into account, as well as the proven quality of Teva's management and strategy over time in making long-term investment decisions.
Teva's share fell 0.6% on Nasdaq yesterday to $43.84. The share fell 1.1% by early afternoon on the TASE to NIS 182.90.
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2009
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