Citi Research has raised its target price for Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) from $47 to $50, citing the company's new management, and investors' coming to terms with Copaxone's pending patent expiry in May 2014.
Citi's bull-case scenario for Teva gives a valuation of $62, a 42% upside on its current price of $43.75 on the New York Stock Exchange, while its bear-case scenario reflects a downside of 9%. "While we acknowledge this is not a near-term earnings story, we think Teva’s risk-reward profile remains the most attractive of the peer group," it says.
Citi believes that the US Food and Drug Administration (FDA) will approve longer-acting Copaxone on January 29, but if no approval is forthcoming, Teva's new CEO will accelerate cost cutting and/or business development plans. As for incoming CEO Erez Vigodman, Citi says that this will not result in material shift in Teva’s strategy. "We believe that Mr. Vigodman’s strong track record in the implementation of transformational strategic plans and shareholder value creation bodes well for Teva shareholders. We anticipate aggressive implementation of the company’s cost-cutting program and more rapid execution on the business development front going forward," is says.
"The corporate governance overhaul taking place at Teva provides an important signal of the board’s focus on shareholder value following the intense investor scrutiny that accompanied the departure of former CEO Jeremy Levin late last year. A leaner, more pharma-savvy board is welcome at Teva, and provides a framework for longer-term positive change within the company," says Teva, concluding that the importance should not be underestimated.
Published by Globes [online], Israel business news - www.globes-online.com - on January 28, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014