Both Merrill Lynch and Nessuah Zannex-US Bancorp Piper Jaffray are upbeat about the results that Teva (Nasdaq: TEVA) will announce on Tuesday. Merrill Lynch projects EPS of $0.68 for the third quarter, in line with the market consensus, while Nessuah Zannex outbids with $0.70.
Merrill Lynch analyst Paul Woodhouse gives a twelve-month price objective for the Teva share of $80. Nessuah Zannex’s Haim Israel is a shade less optimistic, with a price objective of $79, despite his higher EPS projections. Israel sees EPS of $2.78 for 2002 and $3.40 for 2003, while Woodhouse comes in at $2.75 for 2002, and $3.15 for 2003. Both affirm “Buy” recommendations for the share.
Teva shares closed at $68.83 in New York yesterday.
”Alongside Copaxone, we see US generics as the most important driver for Teva. We believe the group’s ability to deliver consistently at the top line but outperform at the bottom line is derived largely from the operating leverage here, which we believe is generally under-estimated,” Woodhouse comments. He observes that the next key event for Teva will be FDA approval for its generic version of Augmentin. Despite the fact that Geneva is already marketing its version and has gained an estimated 40% market share, Woodhouse says that “there is still plenty of room for further entrants.” Merrill Lynch’s financial projections for Teva do not take Augmentin into account, but the investment house is very aggressive with its estimate of the drug’s future effect on Teva’s EPS: “We believe it could add at least 25-30c to estimates for 2003 and possibly 40-50c (or more) on sales of perhaps $150-200m. We believe generic Augmentin has the potential to become Teva’s biggest ever generic product.”
Haim Israel is a little more cautious about Augmentin: “Bearing in mind that Augmentin is an antibiotic used in the treatment of ear and throats inflammations, ,the timing of the launch in the US is critical. Any delays in launching the drug due to a hold- up in obtaining an FDA approval could be significant for Teva, as it may miss the high season in the drug (the US winter),thereby loosing market share.
On Teva’s ethical multiple sclerosis drug Copaxone, Israel says that it has held up well against competition from Serono’s Rebif, and that the latter mainly took market share from Biogen’s Avonex. “The impact of Rebif on Teva’s Copaxone,” says Israel, “ is minimal.”
Published by Globes [online] - www.globes.co.il - on October 24, 2002