Goldman Sachs: Copaxone saved Teva in 2013

Jami Rubin: We grow increasingly concerned about Tevas dependence on Copaxone.

Copaxone sales saved Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) financially in 2013, says Goldman Sachs, in response to the company's fourth quarter and full-year financial report, published last Thursday. The company met its guidance from a year earlier with full-year earnings per share of $5.01 on $20.3 billion revenue.

Goldman Sachs analyst Jami Rubin notes that Copaxone sales reached a record $4.3 billion in 2013, beating the guidance of $3.7-3.9 billion, less than in 2012. She says that the difference of $500 million from the midpoint guidance contributed $0.40 to Teva's earnings per share. She warns, however, "As we approach the potential entry of Copaxone generics, we grow increasingly concerned about Tevas dependence on Copaxone to compensate for challenges in other business areas."

Rubin says management comments point to fundamental issues in Teva's active pharmaceutical ingredients (API) and generics business, but warns, "But with only a minimum of $500 million from the cost savings program falling to the bottom line, we believe investors may have been looking for more impact in the wake of potential Copaxone generics." She looks to incoming CEO Erez Vigodman to take "bold steps such as more aggressive cost cutting, increased share buybacks, M&A, and/or simplification of Tevas business model (i.e., a break-up) in order to become more positive on shares."

Goldman Sachs gives Teva a "Sell" recommendation with a target price of $40, 10% below Friday's close on Wall Street of $44.52.

Conversely, Merrill Lynch gives Teva a "Buy" recommendation with a target price of $53, saying that the share is persuasive compared with its peers on the basis of rosy investor sentiment and the potential of its new CEO. UBS gives Teva a "Neutral" recommendation with a target price of $40, saying that the fourth quarter was without incident, and that Copaxone is worth $8 per share.

Published by Globes [online], Israel business news - www.globes-online.com - on February 9, 2014

Copyright of Globes Publisher Itonut (1983) Ltd. 2014

 
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