Investment house RBC lists Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) as its favorite share in the generic pharmaceutical industry, giving it an "Outperform" recommendation.
Other companies in the industry that RBC recommends are Watson and Mylan.
RBC analyst Adam Greene and associate D. Dewey Steadman, said Teva is their favorite name based on what they see as its best in class pipeline and its strong core business. The analysts also see Teva's global presence as an earnings growth driver, as many countries are still heavily under penetrated.
The analysts add that biogenerics could be a sizable opportunity that has yet to be reflected Teva's valuation. RBC predicts average earnings per share growth of 16% between 2009 and 2012.
Greene and Steadman expect a positive year for generic pharmaceuticals in 2010. They found that in recent years, manufacturing and compliance issues at some smaller firms drove new business to the larger companies, a trend they see continuing. They also found that this trend supported higher prices.
The analysts found attractive valuations, with multiples below their historic levels.
According to Bloomberg, of 27 investment houses that follow Teva, 24 recommend to buy the share, and 3 recommend to hold none of them recommends to sell the share. The average target price is $61.30, a 15.3% premium to its market price.
Published by Globes [online], Israel business news - www.globes-online.com - on December 16, 2009
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