Analysts have largely left their recommendations on Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) unchanged following the company's strategy day, but some have changed their price targets. Ronny Gal of Bernstein Research has cut his price target by $5 to $50, 19.9% above market, and continues to rate the stock "Outperform". He says the strategy day was a non-event, and that there was nothing to make the company's story more convincing.
RBC's Shivani Malhotra also cuts her price target, from $52 to $48, with an "Outperform" rating. She estimates that Teva will post single-digit revenue growth, and that profit will grow more slowly because of a rise in tax rates. She sees Teva as an attractive long-term investment.
Harel Finance analyst Steven Tepper believes that the generic drugs giant is turning from a growth company into a value company, and changing into a global, focused pharma company. He stresses that Teva set qualitative rather than quantitative goals, making valuation difficult. His rating remains "Buy", with a$50 price target.
Jami Rubin of Goldman Sachs considers that the strategy makes sense in the long term, but that it will take time to implement it. She sees no special reason to buy the stock today, and retains her "Neutral" rating. Marc Goodman of UBS is also neutral on the stock. He is happy with Teva's focus, but disappointed that it did not present enough new products.
Teva is abandoning several development programs. It is giving up on the attempt to develop a lower volume Copaxone injection, but is highly optimistic about double-dosage Copaxone (40 mg) to be administered three times weekly.
Teva is also relinquishing development of leukemia treatment StemEx with Gamida Cell, of the Elbit Medical group. Also being abandoned are development of an artery disease treatment with Israeli company MGVS, and development of Obatoclax, which came with the acquisition of Cephalon, and on which Teva recorded a diminution in value in the third quarter. Teva did not amplify on the biosimilars market, and it seems that its importance has also diminished.
As far as geography is concerned, Teva plans to expand in emerging markets. It plans to deepen its activity in Russia, Japan, Mexico, and Turkey, and to enter the giant markets of China and India. Teva's main generics market is the US, and despite the challenges, Teva sees continuing potential there, and has not written off the paragraph 4 patent challenging process, which is in decline. Instead of focusing on volume of activity, the focus now is on products with high entry barriers and high prices. In Europe, the expectation is of greater penetration with generics.
Published by Globes [online], Israel business news - www.globes-online.com - on December 12, 2012
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