Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) fell 10.8% on Nasdaq yesterday to $36.34, on triple its average trading volume, as specific negative sentiment about the company joined forces with the general market worries.
In the past week, Teva, since the Laquinomod Bravo Phase III clinical trial failed to achieve its primary endpoint, the company has shed $9 billion in market cap. 18 months ago, the share price was over $60, and two and half months ago it was above $50. After yesterday's plunge, Teva's market cap has fallen to $32.4 billion - its lowest level since April 2007, a few weeks after Shlomo Yanai took over as president and CEO from Israel Makov.
Even though pharmaceutical stocks are considered defensive holdings in times of crisis, they were not immune to yesterday's sell-off on Wall Stree. Mylan Inc. (NYSE: MYL) fell 7.2%, Sanofi Aventis SA (NYSE: SNY; Euronext: SAN) fell 7.6%, GlaxoSmithKline plc (NYSE; LSE: GSK) fell 5.7%, Merck & Co. (NYSE: MRK) fell 5.6%, Novartis AG (NYSE:NVS; LSE: NOV; SWX: NOVZ) fell 5.3%, Pfizer Inc. (NYSE: PFE; LSE: PFZ) fell 4.8%, Bristol Myers Squibb Co. (NYSE: BMY) fell 3.8%, and Johnson & Johnson (NYSE: JNJ) fell 2.5%.
Most analysts are nevertheless still optimistic about Teva. 25 of 32 analysts in a "Bloomberg" poll give the share a "Buy" recommendation with an average target price of $60.50 - 66% above yesterday's closing price. It remains to be seen if this optimism will last. Last week, when the share price was 20% its current level, some analysts thought that the price was a bargain for an investment. However, other analysts believe that there is a crisis of investor confidence in the company.
Last week, Oppenheimer & Co. downgraded its recommendation for Teva.
Published by Globes [online], Israel business news - www.globes-online.com - on August 9, 2011
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