There seems to be no end in sight to the meltdown in Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) share price. Last night on Wall Street the Israeli pharmaceutical company's share price fell another 9.76% to $18.59, giving a market cap of just $18.87 billion. This means that in the last three NYSE sessions, since Teva published its second quarter results on Thursday, the share price has lost 44% of its value with over $12 billion wiped off its market cap.
In its second quarter results, Teva reported a $6 billion GAAP net-loss, cut its guidance for the third quarter and cut its dividend by 75%. The share price had already lost 40% over the past 12 months.
There may still be further to go. Investment bank Morgan Stanley yesterday cut its target price for Teva from $36 to $16. The new price target implies a 14% further drop in Teva's share price. Two international rating agencies have downgraded their rating for Teva's debt. Moody's lowered its rating from Baa2 to Baa3, and Fitch lowered its rating from BBB to BBB minus, one level higher than junk bonds.
Teva's market cap was worth more than $70 billion when it announced the acquisition of Actavis, the generics division of Allergan, for $40 billion two years ago. Many in the market felt that Teva had overpaid and the acquisition has saddled Teva with $35 billion in debt. Since then a slump in prices in the US generics market has hit all drugmakers. But Teva's large debt has weighed heavy, while a crisis in confidence with the capabilities of the company's management, which saw CEO Erez Vigodman leave in February and not yet replaced, has sent Teva into a tailspin.
Teva opened 4.5% lower on the Tel Aviv Stock Exchange this morning as it closed the arbitrage gap with New York.
Published by Globes [online], Israel business news - www.globes-online.com - on August 8, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017