Teva slide continues

Teva  photo: Reuters

After falling 24% yesterday, Teva's share price opened sharply lower on Wall Street today as Moody's cut its rating for the ailing Israeli pharmaceutical company.

The share price of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) opened 9.6% lower on Wall Street today at $22.50 to give a market cap of just $21.8 billion. Rating agencies and analysts are still digesting disappointing second quarter results and what it means for the ailing Israeli pharmaceutical company future. Moody's has been the first rating agency to react by downgrading Teva from Baa2 to Baa3. This is not a major downgrading but has significance in that it makes credit more expensive for the company.

Yesterday Teva reported a $6 billion GAAP net profit loss, lowered guidance, slashed its dividend by 75% and said that it is in the process of downsizing by 7,000 employees worldwide. The share price, already down 40% over the past 12 months, fell another 24% on Nasdaq yesterday to give a market cap of $24.1 billion. In July 2015, just before the $40 billion acquisition of Allegan's Actavis generics division, Teva's share price peaked at $70.

Teva's woes will make it all the more difficult to find a new CEO to replace Erez Vigodman who left six months ago.

Meanwhile Credit Suisse has downgraded Teva from Outperform to Neutral and cut the target price from $39 to $25. In a paper entitled "Three Strikes and Out," analyst Vamil Divan said Teva had been hit by missing its forecast, cutting dividends and cutting its guidance. He sees no signs of stabilization for some of the key issues facing TEVA’s US generics business problems, including greater price erosion and increased competition.

Divan said, "With no full time CEO or CFO in place at the company, we also struggle to gain strong conviction in any mid-long term upside that may exist."

Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Teva  photo: Reuters
Teva photo: Reuters
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