Leader upgrades Teva

Analyst Sabina Podval: The Copaxone patents win is excellent news.

Leader Capital Markets today raised its recommendation for Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) to "Buy" from "Outperform", with a target price of $49, a 30% premium on Friday's closing price on the New York Stock Exchange, after the company announced that the the US District Court for the Southern District of New York had found in its favor in its patent infringement lawsuit against Momenta Pharmaceuticals Inc. (Nasdaq: MNTA)/Sandoz Inc. and Mylan Laboratories Inc. (NYSE: MYL)/Natco Pharmaceuticals Ltd. (BSE: 524816) concerning Copaxone.

Leader analyst Sabina Podval says that the ruling is a life saver for Teva, which has been dealing with many problems in its core business - the US and European generics market. "The market gave Teva a 70-75% chance of winning the court case, which is why the court ruling is at least partly included in the share price," she says.

Podval says that the court victory is still excellent news for Teva, and will have positive financial and strategic consequences. Financially, the ruling extends Teva's exclusivity, which was previously in doubt, to Copaxone, by up to 15 months, adding $2.5 billion in profits on $7.5-8 billion revenue to the company. Strategically, the court win could greatly improve the market sentiment toward the company.

"It should be remembered that the court victory does not solve all of Teva's problems, including problems related to the generic markets in the US and Europe, which will probably continue to put pressure on the company's results in the coming years. Teva's legal victory could offset the expected pressure on its profits from generics in the coming years, and partly silence investors' fears about the company's growth engines in the future."

Teva's share price rose 8.4% to NIS 158.20 in morning trading on the TASE today, after rising 0.7% on Nasdaq yesterday to $38.01, giving a market cap of $33.1 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on June 24, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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