Teva Pharmaceutical Industries Ltd. (TEVA) Beats Expectations Reporting Higher Q1 Profits

The world’s biggest generic drugmaker, Teva Pharmaceutical Industries Ltd. (ADR) (NASDAQ: TEVA), has beaten expectations and posted higher profits in the first quarter. Teva has said that strong sales of its new generic products and of its drug Copaxone has made it possible for it to post a rise in profit in the first quarter and beat expectations.

Natali Gotlieb, an analyst at the IBI Investment House, said growth in Europe in the first quarter was weaker than in previous quarters. She said, “The impact of the economic crisis can be seen, especially in sales in England. But we believe there could be potential for the future as an economic crisis generally leads to reforms that bring about greater use of generic drugs.”

Limor Gruber, an analyst at brokerage Psagot, attributed the higher-than-expected profitability to efficiency measures, lower-than-expected expenses and Teva's focus on its most profitable products. Reuters has reported Gruber as saying, “The results were reasonable since this is expected to be the weakest quarter this year. Teva generated higher cash flow than I expected and they manage their working capital well.”

The first quarter saw Teva's diluted earnings per share (EPS) excluding one-off items increase to 91 cents from 71 cents a year earlier as sales grew 16 percent to $3.7 billion. According to Thomson Reuters I/B/E/S, analysts had forecast an EPS of 89 cents excluding one-off items, on sales of $3.7 billion. The sales for Teva’s drug Copaxone, which is the world's top treatment for multiple sclerosis, rose 28 percent in the quarter to a record $796 million.

Teva shares were up by 0.6 percent at 224.1 shekels in morning trade in Tel Aviv. The shares closed at $60.03 in New York on Monday, down from a year high of $64.95 in March. Reuters has reported that Gruber has said Teva's shares have suffered due to some bad news, including a ruling by a U.S. jury that Teva infringed on Pfizer's Protonix acid reflux drug patent. Teva plans to appeal the ruling and there are still legal issues to be decided by the judge presiding over the case.

Gruber added, “From my conversations with Teva I believe the impact will be a few hundred million dollars, which is already reflected in the share price.” Gruber rates Teva “outperform” with a $68 price target. He added that, “The share price is now an interesting opportunity.” Teva has declared a dividend of 0.7 shekels (18.8 cents) per share to be paid on May 27. Last year the dividend paid was 0.6 shekels per share.