Market Overview

Morgan Stanley Downgrades Teva, Endo On Drug Pricing And Litigation Concerns

Morgan Stanley Downgrades Teva, Endo On Drug Pricing And Litigation Concerns

Pharmaceutical stocks have been under pressure for the past few trading days, but one Wall Street analyst said the worst is yet to come for a handful of specialty drugmakers.

The Analyst

Morgan Stanley analyst David Risinger made the following changes to his pharma stock coverage:

  • Endo International PLC (NASDAQ: ENDP) downgraded from Equal-Weight to Underweight, price target lowered from $8 to $3.
  • Teva Pharmaceutical Industries Ltd (NYSE: TEVA) downgraded from Equal-Weight to Underweight, price target lowered from $16 to $6.
  • Mylan NV (NASDAQ: MYL) reiterated at Overweight, price target lowered from $32 to $22.
  • Amneal Pharmaceuticals Inc (NYSE: AMRX) reiterated at Equal-Weight, price target lowered from $12 to $4.

The Thesis

Risinger said pharma investors can expect significant earnings multiple contraction due to extended buying group pricing pressures coupled with increasing competition among generic drug manufacturers. In addition, he said Endo and Teva are facing legal uncertainty as well.

“Although stocks have underperformed, we are most concerned about further potential downside for ENDP & TEVA due to branded opioid exposure,” Risinger wrote in a note.

There are thousands of opioid-related lawsuits that are just getting started, and Teva has already announced one opioid settlement with the state of Oklahoma. In addition to legal concerns about opioids, at least 44 U.S. states have joined a lawsuit alleging generic drug price fixing as well.

Risinger said these legal risks coupled with high debt leverage will likely discourage companies from extending their balance sheets on acquisitions, particularly Endo and Teva.

Price Action

Here’s how the stocks mentioned were trading on Monday morning:

  • Teva was down 8.7%.
  • Amneal was down 6.2%.
  • Mylan was down 1%.
  • Endo was down 2.8%.

Related Links:

Washington Worries Trigger Bearish Merck Options Trades

Piper Jaffray: Tilray, GW Pharma Are Early Leaders In Medical Cannabis

Latest Ratings for ENDP

Apr 2020Morgan StanleyMaintainsUnderweight
Jan 2020PiperJaffrayUpgradesNeutralOverweight
Jul 2019Morgan StanleyDowngradesEqual-WeightUnderweight

View More Analyst Ratings for ENDP
View the Latest Analyst Ratings


Related Articles (ENDP + TEVA)

View Comments and Join the Discussion!

Posted-In: Analyst Color Short Ideas Downgrades Health Care Price Target Top Stories Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

VOYAPiper SandlerMaintains58.0
PRUPiper SandlerMaintains64.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
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.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
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