Merrill Lynch today reiterated its "Buy" recommendation and $52 target price for Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), after the company published its 2012 guidance yesterday. However, Merrill Lynch cut its earnings per share forecast for 2012, while cautioning that it may revise its estimates depending on Teva's financial report for the fourth quarter, following the acquisition of Cephalon and the joint venture with Procter & Gamble (NYSE: PG).
Merrill Lynch analysts Haim Israel, Gregg Gilbert, and Sumant Kulkarni say, "While we note the bar for 2012 has now been set lower, we remain encouraged by management’s focus on maximizing total shareholder return as opposed to pursuing large deals." They add, "We continue to like Teva's geographic and business mix diversity and vertically integrated model, and believe that the Street may be overly pessimistic on the size and duration of the Copaxone stream."
The analysts note that Teva's 2012 earnings per share guidance of $5.48-$5.68, which includes Cephalon for the first time, was below their previous estimate of $5.79 and the analysts' consensus of $5.68. They reiterated their earnings per share of $4.92 for 2011, but cut the earnings per share forecast for 2012 to $5.59 from $5.79, but slightly increased their revenue forecast from $20.95 billion to $21.45 billion, citing lower sales in Europe, but higher sales in North America and the rest of the world. The 2012 revenue forecast is less than Teva's guidance of $22 billion.
UBS also reiterated its "Buy" recommendation and $60 target price for Teva, saying that the company's guidance was "as expected" but that investors had hoped for more. "None of the regional or product sales breakdowns was that surprising, although the fact that Tricor generic was not in the numbers was a surprise," said analyst Marc Goodman, adding, "Wile we continue to view the stock as undervalued, we see Copaxone clarity and management's execution as key to making the stock work in 2012."
Teva's share price rose 0.5% in morning trading on the TASE today to NIS 157.90, after falling 1.4% yesterday after the company published its guidance. The share price fell 1.4% on Nasdaq yesterday to $41.76, giving a market cap of $37 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on December 22, 2011
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