Teva Pharmaceutical Industries Ltd.'s (Nasdaq: TEVA; TASE: TEVA) second quarter reports will be published Wednesday, but great strides are not expected. According to Bloomberg, 22 analysts predict that Teva will report revenue of $4.23 billion, 11.4% more than in the corresponding quarter in 2010. The non-GAAP-based net profit per share will be $1.09, or $980 million, similar to the corresponding quarter in 2010, according to the analysts.
Teva, headed by CEO Shlomo Yanai, mainly produces generic drugs, but 30% of its activity is from branded drugs, including multiple sclerosis drug Copaxone. Teva's market cap on Nasdaq and the TASE is $42.7 billion, after a decline of 7.6% since the beginning of the year, but also after a 6.6% rise since the end of April. What do analysts expect from the quarter that has just ended? The descriptions vary from "a boring quarter" or "a quiet quarter" to "lukewarm reports" and even "relatively weak business results," and improvement in the second half of the year.
IBI analyst Natalie Gottlieb expects a boring quarter with reasonable reports. In the innovative drugs field, Gottlieb believes that Teva will enjoy a rise in Copaxone prices at the beginning of the year. There were no major launches of generic drugs. These are expected to take place in the fourth quarter, and most of the attention will therefore be on Teva's annual forecast. "During the second half of 2011, Teva will consolidate the results of Cephalon, Taiyo of Japan, and the joint venture with Procter and Gamble," Gottlieb said.
"With the gradual return to production at the California plant, we believe that the company will succeed in reaching its annual targets. However, the delay in completion of these transactions, and the failure to launch planned generic drugs in the second half, are likely to create pressure from the investors over the company's ability to meet its annual targets."
"Acquisition of Ratiopharm will help
RBC's Shibani Malhotra believes that because of the small number of launches, the main focus will be on company activity outside of the US, the expected integration of Cephalon, and the outlook for progress in the development of multiple sclerosis drugs.
Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) analyst Steven Tepper expects the reports to be lukewarm, but says that the previous large acquisition of German Ratiopharm will help growth. "We are expecting a continuation of revenue growth, mainly as a result of the consolidation of Ratiopharm's activity, and revenue growth from Copaxone and other branded drugs," Tepper said.
"However, excluding acquisitions, the generic field is expected to suffer from the paucity of launchings in the US, from the repairing of defects in factories, and from the erosion of prices in Europe, mainly in Germany." Tepper believes that there will be an erosion of revenue in the generic field in the US, but launches from previous quarters and from the end of the second quarter will boost results.
No news is bad news - says Leader Holdings and Investments Ltd. (TASE: LDER) analyst Sabina Podval about Teva's reports. She believes that the lack of large generic launches and the continuation of budget constraints in Europe will continue to put a strain on activity at Teva, and therefore she expects relatively weak results. The good news comes from Copaxone, and Podval estimates that the drug will continue to bolster the company's results in the second quarter too. "Three quarters after the launching of Gilenya, we see that its effect on Copaxone is not substantial," Podval said about the first oral treatment for multiple sclerosis on the market.
Despite expectations for a lukewarm quarter, most analysts are still positive about Teva. Bloomberg reports that of 33 analysts that cover the company, 27 of them recommend "Buy," six recommend "Hold," and none recommends "Sell". The average target price for the share is $61.82, 29.4% above market value.
Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2011
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