Teva Pharmaceutical Industries Ltd (ADR) TEVA announced Thursday a plan to eliminate more than 25 percent of its worldwide workforce as part of a strategy to slash $3 billion of annual costs.
The Analyst
Goldman Sachs' Jami Rubin upgraded Teva's stock from Neutral to Buy with a price target boosted from $15 to $20.
The Thesis
Teva's cost-cutting plan marks a turning corner event for the Israel-based company, Rubin said in a note. The company is now in the early stages of a "credible turnaround," which is being led by new CEO Kåre Schultz, who has a history of under-promising and over-delivering.
While there will still be investor skepticism, the company's game-plan also marks the first time it has delivered a "concrete strategy" towards deleveraging the company, the analyst said. Specifically, a 4 times net leverage target for 2020 would likely be accompanied with EBITDA growth from $5.7 billion in 2018 to $6.5 billion in 2019, which would bring the company to its net leverage target.
Teva's stock will also benefit from the Street moving their numbers higher which marks a reversal of a bearish shift since the company's August 2016 acquisition of Actavis Generics.
Price Action
Shares of Teva gained 6 percent to trade around $18.32 Friday morning.
Analyst Eats 'Some Humble Pie,' Says Teva Needs To Deliver On Greater Visibility In Coming Months
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.