Even before the ink is dry on the financial report for the fourth quarter and full year of 2008 that Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) published today, the analysts are already weighing. The company again beat its own guidance and the analysts' forecasts.
Clal Finance Batucha analyst Gal Reiter asks, "Why are the results positive?" before going on to answer his own question. "Because in times like this is not a foregone conclusion to beat analysts' forecasts and generate a cash flow from current operations of nearly $1 billion."
Reiter says that Teva's especially high gross profit and remarkably low tax levy helped the company beat analysts' forecasts. Teva paid 6% tax on its adjusted pretax profit for the fourth quarter.
Reiter notes that Teva's 2009 full-year earnings per share guidance is over $3 - even without Barr Pharmaceuticals - whereas the analysts consensus is $2.89, including Barr.
IBI Investment House analysts Noa Weisberg and Natalie Gottlieb write, "The report before belongs to Teva, whereas the company before is Teva plus Barr." They add that Teva's strong cash flow of nearly $1 billion indicates that it will not have to raise capital to finance the repayment of its bridge loans.
Weisberg and Gottlieb add, "Teva's sales were slightly below forecasts because of exchange rate factors." They are also cool about the company's dividend, saying, "The quarterly dividend was raised from NIS 0.45 per share to NIS 0.60, but the dividend yield is still low."
Leader Capital Markets analyst Yoav Burgan attributes Teva's undershooting the analysts' revenue forecast to non-US sales of generics, which were "fairly low and less than we forecast." He notes that the company's inhaler business was strong, and saved the day for the company.
Burgan was also pleasantly surprised by Teva's accounting write-down for its Barr acquisition, which totaled $1.4 billion for R&D in process and $107 million for intangible and other assets.
Psagot Investment House analyst Limor Gruber says, "Teva's fourth quarter results do not bear any special news. The results of this quarter again stress the importance of Copaxone on Teva's results, with higher than expected sales of the drug in both the US and Europe, which offset weak generic sales (compared with our forecasts) in these regions."
Gruber notes that Copaxone, which is manufactured in Israel, contributed to Teva's low tax levy, which helped the company beat the analysts' non-GAAP earnings per share forecasts. She adds that it is hard to consider Teva as a pure generics company that operates in a recession-proof market.
Gruber says, "Teva's dependence on Copaxone is becoming increasingly apparent with each quarter. This dependence on Copaxone suggests that the company's risk is greater than the market estimates. Concern about increasing competition in the multiple sclerosis market over the next decade as new treatments are launched underscores this risk."
Gruber, who previously noted the effect of exchange rates of sale currencies on Teva's results, warned that this trend can be expected to continue and intensify in 2009.
Excellence Investments analyst Gilad Alper also noted that Teva's very low tax rate of 6% boosted its profit. "Were the tax rate the usual 11%, the company would have missed the analysts' forecasts by $0.01."
Published by Globes [online], Israel business news - www.globes-online.com - on February 17, 2009
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