J.P. Morgan Downgrades Teva to Neutral and Lowers PT, No Near-Term Upside in Sight

J.P. Morgan analyst, Chris Schott downgraded Teva Pharmaceuticals TEVA shares from Overweight to Neutral and lowered the December 2014 PT from $45.00 to $43.00. Schott noted that recovery for Teva will be gradual and long-term growth with their cost cutting plan of “$1.5-$2.0 billion over the next five years” requires significant investment which limits near-term earnings. The analyst questioned the company's approach to “new therapeutic entities” (NTEs) introduced in December 2012 and discussed how possible growth from NTE's is over 4 years away. Schott also acknowledged the risk of a generic Copaxone, which currently makes up over half of Teva's earnings. Schott acknowledged that Teva could have “greater-than-anticipated EPS upside from cost- restructuring initiatives” but does “not see a near-term upside in either Teva's earnings or multiple.” Teva closed on Thursday at $38.88.