Analysts regain confidence in Teva

Kare Schultz Photo: PR

Both Credit Suisse and Goldman Sachs are impressed by Kare Schultz. Goldman Sachs has raised its target price to $25.

In the wake of new Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Kare Schultz's streamlining plan, the analysts are again expressing confidence in Teva>. Last week Schultz set out his plans and his determination to implement them at the JPMorgan Healthcare Conference. As the share price returns to levels of $20 for the first time since August after falling below $11 in November both Goldman Sachs and Credit Suisse have positive things to say about the Israeli pharmaceutical company.

Goldman Sachs today raised its target price for Teva's share from $20 to $25, a price reflecting a 25% premium on the share's current price in New York. Analyst Jami Rubin, who raised her recommendation a month ago, keeps her recommendation on "Buy." After seeing his presentation and meeting with him, she wrote, "We feel more confident that under his leadership Teva is on the road to recovery, possibly even sooner than investors expected." She added that as long as Teva meets its targets to lower debt, the share will respond by rising.

Rubin believes that the market's two major concerns over Teva are exaggerated: the risk from its rating cut and the influence of optimization that Teva is implementing on its future revenue. More than that, in her opinion there is even a possible upside to Copaxone on current expectations.

Rubin adds that Schult continues to be certain that he can reach Teva's target of annual savings of $3 billion as part of the streamlining program, "despite the Israeli government's reaction" as she calls it and she does not see any danger of a further deterioration in the business situation.

Regarding the debt rating - Teva is currently rated one above junk by the major agencies like S&P and Moody's and Rubin writes that Teva does not believe that it will keep such a critical investment rating and it will only have a limited influence on its financing costs.

Credit Suisse also referred to Schultz's comments. Analyst Vamil Divan wrote, "Teva did not report any other details other that what the company said in its release about the streamlining plan but the new CEO certainly provides the required credibility in his first weeks in office and investors will be more sure about a turnaround story. His recommendation for Teva is "Neutral" with a price target of $20, close to the market price.

Published by Globes [online], Israel business news - www.globes-online.com - on January 11, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Kare Schultz Photo: PR
Kare Schultz Photo: PR
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