Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) will publish its financial report for the third quarter of 2012 tomorrow, and analysts are divided about what it will show. Most analysts agree that Teva's more important event will take place on December 11, when president and CEO Dr. Jeremy Levin will present his new strategic plan for the company.
Although Teva is the world's largest generic drug maker, a substantial part of its operations are in innovative drugs. It has a market cap of $35.1 billion. The analysts' consensus is that Teva will report earnings per share of $1.09 (a net profit of $1.1 billion) on $5.09 billion revenue.
Harel Finance analyst Steven Tepper believes that Teva will beat the analysts' consensus, forecasting earnings per share of $1.13. The forecast takes into account the inclusion of Cephalon, revenue from Teva's innovative treatment for multiple sclerosis Copaxone, growth in generic drug sales, and some recovery in Europe.
Tepper gives Teva a "Buy" recommendation with a target price of $55, a 36% upside on Friday's close in New York of $40.29. He says that Teva is traded at a multiple of 7, below its peers, and he believes that the strategic plan will restore investors' confidence in the company and boost interest in its shares when the plan is presented in December.
Leader analyst Sabina Podval disagrees, and expects Teva will report weak results for the third quarter. "Continuing pressure on budgets in Europe and the strengthening of the dollar against the euro continued to weigh on Teva during the third quarter," she says. She believes that Teva's US operations will continue to recover, but slowly. She doubts that the quarterly results will affect Teva's share, because investors' focus is on the presentation in December. She believes that, in the short term, Teva will focus on streamlining and the purchase of single molecules and small acquisitions.
"Although the world view of the new CEO and the changes that he intends to make will likely create value in Teva in the long run, they have limited ability to create value for shareholders in the short term," Podval says. She gives Teva a "Buy" recommendation with a target price of $49.
DS Brokerage analyst Richard Gussow expects that Teva's third quarter results will be stable and that they will improve in the fourth quarter. He says that Teva's share has not risen during the market rally, because of the lack of a catalyst. He says that the presentation of the strategic plan in December is just such a catalyst, adding that Teva is cheaper than its peers.
Clal Finance analyst Jonathan Kreizman expects tepid third quarter results, despite a strong contribution from Copaxone. Unless there are unpleasant surprises, he believes that the share price will rise.
Published by Globes [online], Israel business news - www.globes-online.com - on October 31, 2012
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