Market Overview

Credit Suisse Stays Sidelined On Teva: 'Our Growth Expectations Are Below That Of The Company'

Share:
Credit Suisse Stays Sidelined On Teva: 'Our Growth Expectations Are Below That Of The Company'

Teva Pharmaceutical Industries Ltd (NYSE: TEVA) reported disappointing fourth-quarter earnings Wednesday before the market open, sending its shares down about 8 percent.

The Analyst

Credit Suisse analyst Vamil Divan maintained a Market Perform rating and lowered the price target for Teva shares from $26 to $20.

The Thesis

Teva's first-time 2019 guidance was below expectations across many metrics such as revenue, EBITDA and EPS, Divan said in a Wednesday note.

The biggest contributors to the North American generics business were generic Sensipar, Cialis, Concerta and Cubicin, the analyst said. 

Teva should continue to benefit from these products as well as the potential new launches of generic Restasis, Nuvaring and Forteo this year, Divan said. 

Notwithstanding the uncertainty surrounding the timing of approval for these products, Teva sees stabilization of the North American generics business at $1 billion per quarter, the anlayst said. 

The 2019 product level guidance for Copaxone, Ajovy and Austedo was in-line with Credit Suisse's expectations.

Teva also guided to over 27-percent operating margins, a cash-to-earnings ratio of more than 80 percent and net debt-EBITDA at more than 3x within three to five years, Divan said. 

"Although we think the sharp sell-off may be somewhat overdone and 2019 guidance could prove to be conservative, we maintain our Neutral rating as the focus shifts from a restructuring story to a growth one where our growth expectations are below that of the company." 

Teva's ability to return to single-digit top-line growth in 2020 hinges on new product launches such Ajovy and biosimilar Rituxan later this year, along with a better-than-expected uptake of Austedo, the analyst said. 

Credit Suisse estimates flattish growth in 2020 followed by low-single digit sales growth in 2021 and 2022.

The Price Action

Teva shares were adding to Wednesday's losses and were down 2.1 percent to $17.25 at last check Thursday.

Related Links:

The Daily Biotech Pulse: Vanda Q4 Results, Inovio Debt Offering, Caladrius Diabetes Drug Flunks Mid-Stage Trial

Analyst: Intercept's NASH Drug Could Launch Sans Competition After Gilead Trial Failure

Public domain photo via Wikimedia. 

Latest Ratings for TEVA

DateFirmActionFromTo
Sep 2019Initiates Coverage OnNeutral
Sep 2019MaintainsUnderweight
Aug 2019MaintainsMarket Perform

View More Analyst Ratings for TEVA
View the Latest Analyst Ratings

Posted-In: Credit Suisse Vamil DivanAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (TEVA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SCHWCitigroupMaintains44.0
RJFCitigroupMaintains86.0
TWLOMorgan StanleyUpgrades135.0
LPLACitigroupMaintains96.0
AMTDCitigroupMaintains49.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Tidal Royalty Changes Business Model As It Enters Michigan Cannabis Market

Ethereum: What's Taking The Constantinople Hard Fork So Long?