Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) had a particularly good week on Wall Street last week. The share price rose 10% to close at $48.45 on Friday, giving a market cap of $41.1 billion. Last week alone, Teva's market cap increased by $3.9 billion, and the share price is already 35% above the low in early November 2013, a few days after the ouster of former CEO Dr. Jeremy Levin.
Teva's share price is again nearing the $50 threshold, which it last exceeded in July 2009, and which it has not come close to in three years. According to Thomson/ First Call, nine of the 24 analysts covering Teva give it a positive recommendation. Four give it a negative recommendation, and the rest give it a "Hold" recommendation. The average target price is $45.80, 5.5% below Friday's market price. Trading in options has also been positive.
Business-wise, little has changed at Teva compared with November, when the share was at a low. Although a new CEO has since taken charge (Erez Vigodman has taken up the post), the major threat to Teva's flagship product, Copaxone, from generic competition still hangs over the company.
What has changed, at least as the market sees it, is Teva's openness to making mergers and acquisitions, in contrast to Levin's time. There have been several large acquisitions in the pharmaceutical industry in the past few months, but Teva has not participated. Teva itself is seen as a possible acquisition target, with Canada's Valeant Pharmaceuticals International Inc. (NYSE; TSX: VRX) the main potential buyer. Valeant is seeking to become one of the world's largest drug companies, and its growth strategy is based on making numerous leveraged acquisitions.
Last week, there was another giant deal in the pharmaceutical industry: Actavis plc (NYSE: ACT) announced its acquisition of Forest Laboratories Inc. (NYSE: FRX) for $25 billion in cash and shares. Actavis has growth through several large acquisitions. According to Barclays, it is the third largest generic drug company in the US, with a market share of 7.9%, behind Teva (15%), and Mylan Inc. (Nasdaq: MYL) (10.7%). Its acquisition of Forest Laboratories gives it a foothold in the brand drug market. The market expects that, after such a large acquisition, Valeant or other companies will react, and Teva may also be affected.
Published by Globes [online], Israel business news - www.globes-online.com - on February 24, 2014
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