Here’s Why Teva Stock Tumbled Today

Teva’s (NYSE:TEVA) honeymoon with Wall Street hit a big bump on Thursday, when the Israel-based generics giant reported mixed second-quarter results.

Teva reported 2Q18 revenues of $4.7 billion and non-GAAP EPS of $0.78, compared to consensus estimates of $4.74 billion and $0.65, respectively.

Unfortunately for investors, the generic’s business is under pressure, off by nearly 1/3 from the same period in 2017, mostly due to acceleration of competing generics being approved and pricing pressure in the US market. The impact of Copaxone going generic is also playing a more significant role.

Teva CEO Kare Schultz commented, “I am satisfied with our progress in the second quarter. The restructuring program is on schedule, we have already achieved a significant cost base reduction towards our target for the year and we continue to reduce our net debt. COPAXONE® maintained its market share and AUSTEDO® continued to show solid growth. Given the second quarter results, we have decided to raise our 2018 full year guidance.” Mr. Schultz continued, “Our PDUFA action date for fremanezumab is set for mid-September and we are preparing to launch this important product once approved.”

Adding her two cents to the discussion is Mizuho’s Irina Rivkind Koffler: “2018 guidance raise was disappointing, in our view; but more cash continues to drop to the bottom line towards debt repayment: Mgmt. did not raise its 2018 revenue guidance from $18.5-$19.0B (vs. $19.0B consensus). This is somewhat unexpected because of continued durability of Copaxone in 1H:18, and the 4Q:18 reprieve from ProAir generics, but in retrospect is not surprising. We attribute mgmt.’s conservative outlook to Mylan’s >60% price cut on its Copaxone generic, which may have eroded its prior upside expectations.” Koffler rates Teva stock a Hold without suggesting a price target. (To watch Koffler’s track record, click here)

Wall Street believes Koffler is smart to play it safe when it comes to Teva’s prospects ahead, as TipRanks analytics reveal the stock as a Hold. Out of 17 analysts polled in the last 3 months, 5 are bullish on Teva stock, 10 remain sidelined, and 2 are bearish on the stock. With a loss potential of nearly 8%, the stock’s consensus target price stands at $21.91.


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