Teva Still A 'Must-Own' Stock, Worth $86

In a report published Tuesday, Citi analyst Liav Abraham maintained a Buy rating on

, while raising the price target from $70 to $86, after the company announced the acquisition of generics from

. Analyst Liav Abraham pointed out that Teva's acquisition of Allergan's generic pharmaceutical business is a key step in the former's transformation. "Over and above the financial optionality afforded to TEVA by the transaction, its longer term strategic implications should not be ignored as the enhanced earnings and cash flow visibility enable investors to look past Copaxone towards the longer term growth drivers of the company, including its under-appreciated pipeline, in our view," Abraham explained. The deal is expected to boost Teva's earnings by 20-25 percent from 2017 onwards. In the report Citi noted that the transaction would enable Teva to diversify away from its Copaxone franchise and deploy cash flows to strengthen its specialty franchise. Moreover, positive developments in the company's pipeline in recent months are likely to garner increased attention in the near future. "Over the near to medium term, we expect the new CEO to focus on the ongoing Copaxone switch, execution of the sizeable cost cutting program and smaller, accretive M&A opportunities," Abraham wrote. The EPS estimate for F2016 has been raised from $5.46 to $5.51.