Teva Pharmaceutical Industries Ltd (ADR) (TEVA) Lacking Leadership and Strategy; Credit Suisse Downgrades to Underperform

TEVA Core Challenges Aren't Going To Fade Anytime Soon, Says Analyst


Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) a dimming pharmaceutical giant has been rocked by increasing competition on the generic market and left without direction lacking a full-time CEO. Notably as of this morning shares reached $16.00, abysmal levels not seen since May of 2002.

Questioning the company’s lack of leadership and strategy, analyst Vamil Divan of Credit Suisse is downgrading TEVA stock’s rating from Neutral to Underperform, while cutting the price target from $25 to $13, representing an 18% drop below current trading levels. (To watch Divan’s track record, click here)

Divan sees limited room for optimism if the company can follow through on the appointment of “a credible CEO/CFO, disposal of assets at attractive terms and continued exclusivity for Copaxone 40mg well into 2018.” However, the analyst underscores that “while TEVA may regain its luster a few quarters from now, we see this as the least compelling opportunity in our sector for the next several months as recovery from challenges of this extent typically take time.”

For now, the company is facing a number of challenges, which overshadow any quick recovery with Divan noting: “For the core US generics business, we believe the issues around generic price erosion and increased competition will continue for some time. On the specialty pharma side, we see an opportunity for upside from fremanezumab (anti-CGRP) but limited other reasons for optimism, while the threat of generic versions of Copaxone 40mg entering the market in 2017 or early 2018 remains. Finally, the company has yet to fill its CEO and CFO positions and we believe they may be finding it difficult to find the proper leader(s) to tackle the various internal and external challenges TEVA is facing.”

In his EPS forecast, Divan is lowering numbers through 2019. In 2017 the analyst is lowering EPS from $4.29 to 4.28, in 2018 from $4.35 to $4.32, and in 2019 from $4.71 to $4.68 as “we do not expect the core challenges they are facing to fade anytime soon,” opines Divan.

TipRanks analytics exhibit TEVA as a Hold. Out of 15 analysts polled by TipRanks in the last 3 months, 3 are bearish, while 12 are sidelined on Teva stock. With an upside potential of 68%, the stock’s consensus target price stands at $26.65.

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