Barclays: Teva's our favorite generic

Analyst Richard Silver: We continue to view Teva’s size as a competitive advantage, particularly for large, consolidating customers demanding large suppliers.

Barclays Capital has reiterated its "Overweight" recommendation for Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) and raised its target price to $60 from $59.

Calling Teva "our favorite name in the generic space," Barclays analyst Richard Silver says that the company is "well-poised to exceed modest expectations implied in current valuation, with the stock trading at only 11 times our 2010 earning per share estimate. With Teva's 2012 plan likely to be revised upward as early as mid-year (to factor in Barr) and likely improving quarterly earnings to finish 2009 on a high note, we expect the stock to outperform in the second half of 2009, particularly as investors begin to focus on projected growth acceleration in 2010."

Barclays also raised its 2009 earning per share (EPS) forecast for Teva from $3.27 to $3.375, on the basis of the company's strong first quarter results. It also raised its 2010 EPS forecast to $4.24 from $4.18.

Silver noted, "We continue to view Teva’s size as a competitive advantage, particularly large, consolidating customers demanding large suppliers with attractive product pipelines, where the stronger relationships have evolved into quasi-partnerships, with benefits to both sides. We believe that geographic and product diversification will continue to play a major role in Teva’s successful growth strategy, particularly given how well the diversification is managed - by no means an easy task."

As for Teva's multiple sclerosis drug, Copaxone, Silver said that, in its first quarter conference call, Teva announced an upcoming trial for low-dosage injections to see if a low volume formulation can "improve the injection experience for patients". He points to the 9.9% price hike in the drug in the US in April, the second hike of this size already this year.

Silver also cites three upcoming generic launches later this year: allergy treatment Allegra, made by Sanofi-Aventis SA (NYSE: SNY; Euronext: SAN), which has $305 million in annual brand sales (Barr Laboratories is handling the generic launch, which can take place in November); heartburn treatment Prevacid, made by Takeda Pharmaceuticals Co. Ltd. (TSE: 4502), which has $3.3 billion in annual brand sales, and which Silver also expects to take place in November; and asthma treatment Pulmincort, made by AstraZeneca plc (LSE: AZN), which has $1 billion in annual brand sales, and which Teva may launch in December. More generic launches are possible, though Teva does not yet have approval.

Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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