Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) has lost 50% of its value in the past month, and Poalim IBI Underwriting and Investments Ltd. (TASE:PIU) is recommending taking advantage of the low price to increase holdings.
Teva yesterday reported that it had obtained approval for extending the use of its AUSTEDO drug for treatment of movement disorder to late-stage dyskinesia, which is common among schizophrenia patients, after the drug was approved last April for treatment of patients with Huntington's Disease.
IBI pharma analyst Steven Tepper puts the potential sales from the product for Teva at $500 million-$2 billion. That is equivalent to two thirds of the company's sales of Copaxone in the US. Generic competition for Copaxone is expected to materialize in the coming year.
Tepper reminds his readers that people were already giving up on Teva's Copaxone bonanza in 2013, when the expiration of the main patent, scheduled for May 2014, was approaching. "We're still waiting," he writes.
Everyone is depressed now, and no one wants to hear about the share. "When everyone is dumping the stock for no economic reason, that is the time to accumulate them," he explains.
Teva's current weights on the Tel Aviv 35 and Tel Aviv 125 indices are 3.5% and 2.5%, respectively. These weights are slated to rise to 7% and 5% in two steps: one in September and one in October. "In our opinion, a large part of the market holds less than the current proportions, and if they do not double their holdings, they will find their holdings are 30-40% below Teva's weight on the indices. All of the investors measured against the reference indices will find themselves in a deep short position on the share," he notes.
According to Tepper, a number of measures are likely to support the share price in the short term, including the completion of measures aimed at reducing the company's debt, the appointment of a CEO with a global reputation, further postponement of generic competition for 40-milligram Copaxone, attempts at taking over the company, and possible positive surprises in the company's third quarter results.
In the bottom line, Tepper recommends "increasing speculative exposure to the share, because in addition to the risk of a long position, which we feel is well reflected in the share price, we see a significant risk in remaining in a short position."
Published by Globes [online], Israel Business News - www.globes-online.com - on August 31, 2017
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