The share price of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) continues to fall again today. In afternoon trading, the share price was down a further 2.51% after falling 2.61% on the NYSE yesterday to $34.28, giving a market cap of $34.79 billion.
Nor does UBS analyst Marc Goodman see the Israeli pharmaceutical company's share recovering any time soon. In a report today on Teva entitled "New guidance bring numbers down more," he maintains a neutral recommendation on the company but cut its target price from $42 to $35, the same price, more or less, at which the share is currently trading. He says, "We're lowering numbers, but we still think it's still too early to step up to this name."
Goodman observes that his lower target price follows Last Friday's lower than expected guidance. Consequently he said, We decrease our sales forecasts to $23.5 billion from $27.1 billion for 2017 and to $23.3 billion from $26.6 billion for 2018 and our EPS forecasts to $4.65 from $5.90 for 2017 and to $4.85 from $5.60 for 2018. We make no changes to our 2016 sales and EPS."
He further notes, "While investor sentiment on the generics sector is about as bad as we have seen it in a long time, and while we think that Teva has a good generics pipeline and can probably drive at least low-single digits sales growth over the long term, this is below expectations. Also, the key milestones in the branded side come in 2H17 and will not fully offset the decline in Copaxone sales from potential generic competition. Hence, we remain on the sideline for now on this name."
On the key matter of Copaxone's future, UBS notes, "At this time it is unclear how the Copaxone 40mg case will unfold. We should know more in 1Q17 with a court decision on the patent trial. Consensus numbers reflect some type of erosion in Copaxone sales starting in 2017. Thus, if Teva wins the case, it would be upside to numbers."
On Teva's branded pipeline, Goodman writes, "We estimate that the pipeline has >$4 billion sales potential in 2020. However, we include risk adjusted sales of ~$1.2B in our model. Key pipeline products include SD-809 (for Huntington's, Tardive Dyskinesia, and Tourrette's), CGRP (Ph 3, data in 2H17 for migraine) and several respiratory products. The long term guidance appears to include meaningful pipeline growth, and we look for more visibility to get more aggressive."
He also sees the generics pipeline as robust with >2,000 applications pending approval globally. "In the US, it has >100 FTF opportunities, including Gx versions of NuvaRing, Viagra, Axiron, and Byetta which could launch in 2017/2018. While we think that Teva would ultimately bring these products to market, we're not sure about timing, and we model ~2% annual growth for 2017-2020."
Teva has now lost nearly 50% of its share price over the past year. UBS sees no quick recovery but does seem to suggest that the bottom has been reached.
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2017
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