Credit Suisse has reinstated its "Outperform" recommendation for Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) with a target price of $53, citing five catalysts for growth.
Credit Suisse analyst Michael Faerm had downgraded Teva to "Neutral", citing the major challenges that the company faced in 2011, which weighed on its share. He says that these challenges have been "substantially resolved and Teva's valuation does not reflect an improved outlook."
Faerm's five upcoming catalysts for Teva are its potential mystery product launch in the fourth quarter, which some analysts believe is generic Lipitor; a new guidance for 2012 following the closing of its acquisition of Cephalon, which he expects to be announced in December; the potential for one or more share buybacks; a possible Copaxone trial victory in the first half of 2012; and clarity on its new joint venture with Procer & Gamble (NYSE: PG).
Faerm cites three risks to Teva: its dependence on challenges to patents on brand drugs and new generic applications with the US Food and Drug Administration (FDA); weaker than expected revenue growth in the US market, due to pricing pressures or a lack of growth in generic drugs; its unsuccessful defense in court for its branded products, especially Copaxone. In the case of Copaxone, a court ruling is pending, and a ruling against Teva could result in generic Copaxone entering the market in 2012.
Credit Suisse predicts that Teva will report $4.89 earnings per share for 2011, down from its previous forecast of $5.04, on $18.22 billion. It raised its earnings per share forecast for 2012 to $5.70 from $5.67, on $22.19 billion revenue.
Teva's share price fell 0.1% on Nasdaq yesterday to $41.66, giving a market cap of $37.1 billion, and fell 0.8% in morning trading on the TASE today to NIS 153.50.
Published by Globes [online], Israel business news - www.globes-online.com - on November 9, 2011
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