Teva Pharmaceutical Industries Ltd (ADR) (TEVA) Just Lost a Bull

Though BTIG's Tim Chiang sees a recovery in the works for TEVA, he sees shares as "fairly valued" at currently levels.

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) may be a “recovery story in the making,” from the eyes of BTIG analyst Tim Chiang, but the journey for the beleaguered biotech giant to make a full swing comeback looks to be at the minimum two years in counting.

Judging shares to “appear fairly valued,” the analyst downgrades from a Buy to a Neutral rating on TEVA stock without listing a price target. (To watch Chiang’s track record, click here)

“While we believe the Co. is likely to benefit from new CEO Kare Schultz’s restructuring plan (which is expected to reduce the cost base by ~$3B, we think the road to recovery will take an extended period of time (we est. at least two years),” highlights the former bull, now commenting from the sidelines.

Additionally, taking under account expectations for lower revenues, operating costs, as well as operating incomes, Chiang is scaling back his current year revenue estimates from $20,900 million to $18,971 million along with EBIT from $4,995 million to $4,531 million and adjusted EPS from $3.13 to $2.75. The analyst now believes 2018 is set to be “a rebasing year for revenues and profits.”

“While we think the aggressive cost cutting plan will partially mitigate an expected drop in revenues and profits, our analysis suggests the fall in operating profits in CY18 will be deeper than we originally had forecast. While we maintain our CY18 WW Copaxone sales estimate at ~$2.2B, we have lowered our WW generic sales estimate to $12,350M (from $13,998M), to reflect continued price erosion in the US market in CY18, and modest growth outside the US,” asserts the analyst.

Likewise, the “recent downgrade of credit rating by Moody’s may make future debt refinancings more expensive,” Chiang surmises, noting that though he anticipates the giant can meet its debt obligations in 2018, a meaningful portion of debt maturities in 2019 through 2021 will likely require refinancing. Between now and 2012, the analyst wagers the giant has roughly $15.4 billion of debt obligations to be paid.

TipRanks‘ verdict on Wall Street’s consensus opinion on this comeback biotech giant: Hold. Out of 22 analysts polled in the last 3 months, 5 are bullish on Teva stock, 13 remain sidelined, while 4 are bearish on the stock.  

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