Teva guidance disappoints but CEO lifts share

Jeremy Levin spoke of a saving of $1.5-2 billion over the next five years from restructuring.

On Friday, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) provided guidance for its non-GAAP results for 2013 that was disappointing, but the company's share price rose following optimistic statements by its management in a conference call with investors.

The company announced that it expected earnings per share on a non-GAAP basis of $4.85-5.15 in the coming year. This compares with a consensus analysts' estimate of $5.65.

Teva projects revenue of $19.5-20.5 billion for 2013. The analysts' estimate was $20.8 billion. Net revenue from sales of generic drugs is projected to be $10.3-10.7 billion, and revenue from sales of brand medicines $7.6-8.0 billion, of which multiple sclerosis treatment Copaxone is expected to account for $3.7-3.9 billion.

Teva sees gross profit margins of 45-47% on generic sales and 84-86% on branded sales. The gross profit margin on Copaxone is 89%. The majority of sales will be in the US, $10-10.6 billion, followed by Europe, $5.5-6.1 billion, and the rest of the world, $3.7-4.3 billion.

Cash flow from operations is projected at between $4.5 and $4.8 billion. Free cash flow (cash flow from operations minus capital expenditures and dividends) is projected at between $2.5 and $2.8 billion.

In early trading on Wall Street on Friday, Teva's share price fell 4%, but the conference call held by the company's management calmed investors, and the share climbed back to close slightly higher at $40.35. In Tel Aviv this morning, Teva's share price is down 0.77%, at NIS 153.80.

In the conference call, Teva CEO Jeremy Levin spoke of a promise of transparency, and said that the conservative guidance was intended to win back investors' faith. He said that it was a matter of turning over a new leaf before he unveils his new strategy for the company, which he will present at an analysts' conference on December 11.

Levin hinted that Teva would demand that the US Food and Drug Administration should require a full clinical trial for any generic version of Copaxone, which would delay the entry of any rival product into the market.

Levin also spoke of a saving of $1.5-2 billion over the next five years from restructuring.

Published by Globes [online], Israel business news - - on December 2, 2012

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

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