After just over a year in the job, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Richard Francis can afford a smile. For the first time in three and a half years the Israeli pharmaceuticals company is the most valuable company on the Tel Aviv Stock Exchange (TASE).
The last time Teva held this title was in the peak of the Covid crisis in mid-2020. This week, Teva's market cap has risen to NIS 47 billion, leapfrogging NICE Systems Ltd. (Nasdaq: NICE; TASE:NICE), which has a market cap of NIS 45.9 billion. In third place is Bank Leumi (TASE:LUMI), which has a market cap of NIS 43.7 billion.
Teva's stay in first place could be short-lived as NICE Systems share price is currently 4.25% higher, giving a market cap of $12.848 billion, while Teva's share price is up 0.62%, giving a market cap of $12.768 billion.
Regardless of whether Teva's share remains top, it has performed impressively over the past six months rising 50% and over all of 2023 the share price rose 14.5%. However, the main reason Teva is again top is the weakness of its rivals - NICE had a market cap of NIS 62 billion in 2021 in the days before the tech bubble burst and 18 months ago Bank Leumi had a market cap of NIS 56 billion, before Wall Street began attracting investors because it was outperforming the TASE.
On Wall Street, Teva is the third most valuable Israeli company after advanced driving assistance systems (ADAS) company Mobileye Global Inc. (Nasdaq: MBLY) with a market cap of $24.6 billion and cybersecurity company Check Point Software Technologies Ltd. (Nasdaq: CHKP), which has a market cap of $17.7 billion.
Teva has been through upheavals
Teva's share price is still far from its peak a decade ago, when it reached $70 per share, giving a market cap of NIS 240 billion. Today the share price is 80% lower at $11.3. The record high share price was in 2015 after Teva announced the heavily leveraged $40 billion acquisition of Actavis, under then CEO Erez Vigodman. This and other failed acquisitions left Teva mired in debt and needing to implement a painful streamlining plan with investors concerned that the company might completely collapse.
In addition Teva became embroiled in huge legal suits over the sale of addictive opioids, and price fixing in the generic market. As if all that wasn't enough, revenue from its flagship branded drug Copaxone for treating multiple sclerosis began to dwindle after its patent expired and generic rivals entered the market.
CEO Kare Schulz led the streamlining plan which led to hundreds of layoffs and many factory closures. He successfully reduced Teva's debt from $37 billion to $18 billion at the end of the third quarter of 2023.
Schulz left at the end of 2022 to be replaced by Francis who in May presented his new strategic plan, which stresses branded products. In line with this new strategy, Teva announced three months ago a collaboration with Sanofi on an original drug developed by Teva for treating inflammatory bowel disease. The drug is expected to begin Phase III clinical trials in mid-2024.
Francis wants to accelerate growth. For five consecutive years Teva's revenue shrank but in 2023 it grew for the first time with expected revenue of $15.1-15.5 billion with non-GAAP net profit of $4-4.4 billion.
Nevertheless, Wall Street analysts see no upside in Teva with 17 of 26 analysts giving a price target of $11.3 per share, similar to its price today.
Published by Globes, Israel business news - en.globes.co.il - on January 8, 2024.
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