The share price of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has risen 16% in the last two trading sessions on Wall Street and is up a further 1% in premarket trading to $12.17 per share, giving a market cap of $12.7 billion. the share price is up 24% since the beginning of 2020.
Looking over the longer term, these impressive rises merely compensation investors for the steep losses of recent years - 36% in 2019, and 19% in 2018. Today's share price is still 82% below its peak in 2015.
Teva's share price has been boosted this week by positive results in Japan for two pivotal studies of migraine treatment Ajovy, while last week the Israeli pharmaceutical company received FDA approval for its auto-injectable version of Ajovy. This version will help Teva compete with its rivals in the migraine treatment market while the trial results could assist the company in receiving marketing approval for Ajovy in Japan.
Oppenheimer sees upside in plant closures and generic revenue
Ahead of publication of Teva's financial results for the fourth quarter and full year 2019 next Wednesday, February 12, Oppenheimer equity research analyst Esther Rajavelu has issued a report, "Teva Pharmaceutical - Setting the Stage for 2020." Oppenheimer gives a target price of $12 (already surpassed by the share price today) and an "Outperform" recommendation.
Rajavelu writes, "We may be conservative with our -3% year-on-year growth rate for 2020, and -1% thereafter. Theoretically, we estimate 10% upside to our price target, if generic revenues remain stable, all else equal. As a reminder, management has commented on a positive outlook for the combined generic and biosimilar portfolio."
Rajavelu adds, "We anticipate specific comments on the impact of ongoing manufacturing plant shutdowns on gross margin. As a reminder, Teva has closed/divested 13 manufacturing sites and has plans to shut down another ten. Theoretically, we estimate 11% upside to our price target with -50bps average annual improvement in gross margin over the next three years, all else equal."
Regarding Teva's legal exposure (in the opioid settlement and price fixing allegations), Rajavelu does not expect any clarifications in next week's financial report.
Published by Globes, Israel business news - en.globes.co.il - on February 5, 2020
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