UBS: Latest Teva fall unjustified

Teva Photo: Sivan Faraj

Both UBS and Oppenheimer say that the additional information required by the judge in Oklahoma opioids case will not affect the $85 million settlement reached by Teva.

Two and a half weeks ago, when Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) announced that it had reached an $85 million settlement of the claims against it by US state of Oklahoma, Wall Street responded by pushing Teva's share price down 12%. Following reports that this settlement may not be approved by the court, the share again plunged, this time by 4%. Also affecting the trend in the share was a negative recommendation by Barclays Bank.

At the end of yesterday's trading on the New York Stock Exchange (NYSE), Teva's share price was $8.71, slightly higher than the low point reached in late May, although the share fell to lower levels in the course of trading. Teva's market cap is $9.5 billion. The share rose during today's morning trade on the Tel Aviv Stock Exchange (TASE), after shedding over 8% yesterday.

The lawsuit in Oklahoma concerns the epidemic of addiction to opioid pain relievers in the US. It is being asserted that the drug companies, including Teva, aggressively marketed the drugs without warning about their dangers. The Oklahoma proceeding was the first of a series of proceedings in various US states, and although Teva previously stated that it would not seek settlements in these proceedings because it had no money, the company signed an $85 million settlement without admitting any wrongdoing.

UBS retains "Neutral" recommendation for Teva's share

It was reported in recent days that the judge in the Oklahoma case was refusing to approve the compromise, and was asking for further information. The additional information is necessary in order to make sure that the settlement meets the criteria of a new Oklahoma law restricting the State Attorney in dividing the money received in legal settlements, UBS analyst Navin Jacob explains. He writes that Teva's settlement in Oklahoma will not be affected, so that the steep fall in Teva's share price in unjustified. UBS continues to recommend "Neutral" for the share with a $12 target price, 38% higher than the current price.

Oppenheimer, the investment bank that bucked the trend several days ago by upgrading its recommendation for the Teva share to "Market outperform," believes that the share's weakness is an attractive entry point for investing in Teva. "In our opinion, the judge's demand for clarifications concerns the division of the money from the settlement. Based on the information we now have, we believe that this development does not reflect a risk to the amount of the settlement signed by Teva," Oppenheimer writes. Oppenheimer also set a $12 target price for Teva's share.

Meanwhile, at the annual meeting of Teva's shareholders yesterday, all of the proposals brought by the company to a vote were approved. The shareholders approved the reappointment of serving directors Amir Elstein, Roberto Mignone, and Dr. Perry Nisen until 2022. Compensation for the company's executives, which was brought up for a non-binding ("say on pay") vote, was approved by a majority: 88.7% of those voting in favor, 11.1% opposed, and 0.2% abstaining (the majority including broker non-votes by the investment brokers holding shares for shareholders who did not deliver their votes was 73.4%).

The shareholders also approved compensation for chairperson Sol Barer and the other directors, plus the appointment of accounting firm Kesselman & Kesselman (PricewaterhouseCoopers) as the company's auditors until the next annual meeting.

Published by Globes, Israel business news - en.globes.co.il - on June 13, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Teva Photo: Sivan Faraj
Teva Photo: Sivan Faraj
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