Notable Analyst Downgrades in Healthcare: Concordia International Corp (CXRX), Teva Pharmaceutical (TEVA)

Concordia International Corp

Concordia International Corp (NASDAQ:CXRX) shares collapsed today, falling nearly 40%, after the Canadian generic-drug maker reported third-quarter results that were well below the Street’s expectations.

Adding insult to injury, Canaccord analyst Neil Maruoka downgraded shares of Concordia Healthcare from Speculative Buy to Sell, while slashing the price target to $1.00 (from $10.00).

Maruoka commented, “While the company’s International business appears to be holding up in the face of substantial currency headwinds, Concordia’s US business continues to experience significant challenges. Donnatal, in particular, continues to be hit by competitive pressures, and forecasting performance with any degree of accuracy has been very difficult. Our assessment of the viability of Concordia was based on the data that we had in front of us, but there clearly appear to be several aspects of the underlying US business that continue to erode faster than the data would indicate.”

“The surprising Q3 miss is another blow in a long stretch of bad news, and we don’t immediately see the catalyst that can turn this around. Given CXRX’s high debt load and eroding performance, we see only a small amount of value in the equity at this point, and expect that the stock could go lower before it goes higher,” the analyst concluded.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Neil Maruoka has a yearly average loss of 43.8% and a 12% success rate. Maruoka has a 77.2% average loss when recommending CXRX, and is ranked #4018 out of 4162 analysts.

Out of the 3 analysts polled by TipRanks (in the past 3 months), 1 rates Concordia Healthcare stock a Buy, 1 rates the stock a Hold, while 1 suggests to Sell. With a return potential of 543%, the stock’s consensus target price stands at $12.67.

Teva Pharmaceutical

Merrill Lynch analyst Sumant Kulkarni downgraded shares of Teva Pharmaceutical (NYSE:TEVA) from Buy to Neutral, while lowering the price target to $48 (from $72), which represents a potential upside of 18% from where the stock is currently trading.

Kulkarni explained, “A closer look at our model, which we are tweaking heading into 3Q, which Teva will report on 11/15, opens up the possibility that Teva could trim its 2016 outlook. In this Spec Pharma investing environment, we note that a lower outlook vs. one issued as recently as 7/13 would not be viewed too kindly by investors. With net generic pricing potentially poised to worsen further as well (on possible Department of Justice moves) and high investor apathy towards the sector, we downgrade the stock.”

“Our new 3QE revenue/EPS are $5.7bn/$1.25; consensus is $5.7bn/$1/29. Our new 201 6E EPS is $5.10, which is below Teva ’s outlook range of $5.20-5.40; consensus is $5.20. Our 2017E EPS of $5.01 could be overly conservative as we: (1) have relatively low visibility on new generic launches; and (2) model generic entry on Copaxone 3TW in Jan-17, which may or may not happen; a lower court ruling in the generic challengers ’ case could come by 1Q17 and generic(s) could launch if approved. Our 2018-19 estimates were also already lower vs. Teva ’s outlook, mainly based on our generic Copaxone entry assumption and lack of any specific launch value for pipeline brands,” the analyst added.

According to, analyst Sumant Kulkarni has a yearly average loss of 4.5% and a 33% success rate. Kulkarni has a 9.8% average loss when recommending TEVA, and is ranked #3400 out of 4162 analysts.

Out of the 16 analysts polled by TipRanks (in the past 3 months), 13 are bullish on Teva, while 3 remain neutral on the stock. With a return potential of 63%, the stock’s consensus target price stands at $66.50.

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