Merrill Lynch sees 23% premium for Teva

Merrill Lynch has reiterated its "Buy" recommendation for Teva, with a target price of $58.

Merrill Lynch says that a delay in the launch of generic Copaxone from early 2013 to mid-2014 will add $2 per share to the value of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA). Analysts Gregg Gilbert, Haim Israel, and Sumant Kulkarni therefore reiterate their "Buy" recommendation for Teva, with a target price of $58, a 23% premium on yesterday's closing price on Nasdaq.

Merrill Lynch has initiated coverage of Momenta Pharmaceuticals Inc. (Nasdaq: MNTA), which is developing a generic version of Teva's multiple sclerosis treatment, Copaxone. The report on Momenta gives what Merrill Lynch calls a "more realistic" launch of generic Copaxone of mid-2014, after Copaxone's patents expire, instead of early 2013. The delay would add 22% to Merrill Lynch's earnings per share forecast for Teva for 2013, 18% for 2014, and 14% for 2015, compared with its current forecasts.

The model continues to assume zero contribution from Teva's oral multiple sclerosis drug, Laquinimod, and takes into account other oral drugs under development or in the case of Novartis AG's (NYSE:NVS; LSE: NOV; SWX: NOVZ) Gilenya, which are already on the market.

Merrill Lynch currently predicts $5.66 earnings per share for Teva in 2012 and $4.60 in 2013.

Teva's share price fell 0.1% on Nasdaq yesterday to $47.12, giving a market cap of $44.3 billion, but rose 0.1% by mid-afternoon on the TASE today to NIS 162.50.

Published by Globes [online], Israel business news - - on June 28, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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