Analysts upbeat on Teva results

Leader and Bank Hapoalim both reiterate "Outperform" recommendations for Teva after it published its financial report today.

"Bottom line, Teva Pharmaceutical Industries Ltd's (Nasdaq: TEVA; TASE: TEVA) financial report was in line with expectations, but was relatively strong compared with the rest of the year," says Leader Capital Markets analyst Sabina Podval in response to the company's financial report for the fourth quarter and full year of 2011. She gives Teva an "Outperform" recommendation with a target price of $49.

Podval says, "The erosion of generic sales in the US eased, thanks to big launches of Lipitor and Zyprexa in the fourth quarter, but Teva has still not been able to restore growth in the sector." She adds, "The economic slowdown in Europe continues to weigh on generic business, and we fear that a worsening of the debt crisis in the coming years is liable to affect Teva's business results.

Bank Hapoalim analyst David Levinson says, "The reports are encouraging in all areas, except for a slight weakness in the generics business in the US… 2012 looks promising, with earnings per share of $5.48-5.68 on $22 billion revenue, according to the company's guidance."

Levinson reiterated his "Outperform" recommendation but cut his target price to $56 from $69.

Harel Finance analyst Steven Tepper says, "The strong financials, which include the consolidation of Cephalon's brand drugs business, the consolidation of Taiyo Pharmaceutical Industry and Teva-Kowa Pharma in Japan, indicated the growth of the company's generic business outside the US and Europe. The financials also reflect large generic launches in the US."

Clal Finance Brokerage analyst Jonathan Kreizman says, "Teva's results were in line with expectations, with Copaxone stable, and a significant recovery on the generics side in the US, along with organic weakness in generics in Europe… Most attention should be directed at the guidance for 2012, which either reflect a conservative outlook or weakness in business trends, especially in Europe in view of the sovereign debt crisis."

Bernstein Research analyst Dr. Aaron Gal says that, in contrast to the past, only 22% of Teva's revenue came from US generics sales, and that they contributed only 10-15% of the operating profit. While the reduction in the dependence is welcome, he cautions that, regrettably, half of this was due to the diversification of business, and half from underperformance in previous years. He estimates that Copaxone accounted for 40% of Teva's profit.

Excellence Investments analyst Gilad Alper sees little good news in the financial report, and is waiting for Teva's new CEO, Jeremy Levin, to take over in May. He says that the fourth quarter of 2011 and the first quarter of 2012 show Teva at a peak, because Copaxone still faces no oral competition.

Teva's share price rose 2.6% by mid-afternoon on the TASE today to NIS 168.10, after rising 1.3% in after-hours trading on Nasdaq to $44.10 to $44.10, recouping the loss during the trading session, giving a market cap of $38.5 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on February 15, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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