Goldman Sachs sees Teva stability over next year

Teva Photo: Sivan Faraj
Teva Photo: Sivan Faraj

Analysts Nathan Rich and Steven Braun give Teva a "Neutral" recommendation and 12-month $12 price target.

After more than 18 months, investment bank Goldman Sachs has resumed coverage of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) with a "Neutral" recommendation and a 12-month price target of $11.55.

Goldman Sachs analysts Nathan Rich and Steven Braun see revenue and margins stabilizing after three years of declines since the Actavis deal and the loss of Copaxone's exclusivity. They say that the generics pharmaceutical environment remains challenging although price deflation has probably come to an end. They add, "While companies have shifted their pipelines to higher value complex generics and biosimilars, our analysis of expected launches suggest that the contribution from these new products may not offset the headwind from price erosion and competition."

They continue, "With legal action related to opioids and price fixing still unresolved, the uncertainty associated with the ultimate outcome and impact to free cash flow remains an overhang, and we do not find valuations attractive relative to historical levels without further clarity on potential liabilities."

The analysts expect Teva's topline and EBITDA to stabilize in 2020 as Austedo, biosimilar and Ajovy offset5 ongoing declines in Copaxone. Bendeka and legacy generics. They see potential for Teva's plan to rationalize manufacturing, and to improve margins but tempered by mixed headwinds from sales declines in legacy specialty products.

Published by Globes, Israel business news - en.globes.co.il - on July 28, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Teva Photo: Sivan Faraj
Teva Photo: Sivan Faraj
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