Teva Pharmaceutical Industries Limited (New York Stock Exchange: Tifa; level: Tifa) saw its share price rise by 12.8% yesterday, amid high trading volume, to its highest level in five years. The stock price of $15.74 gave it a market value of $17.8 billion, after the company reported first-quarter results with revenue of $3.81 billion, a GAAP net loss of $139 million, and a non-GAAP net profit of $548 million. .
Investors were impressed by the fact that Teva reaffirmed its annual forecast and beat revenue guidance for the quarter due to better-than-expected sales in the U.S. generic drug market. The stock rose even though earnings per share were lower than analysts' expectations.
But what particularly excited the market were the positive results from a phase 3 clinical trial of Olanzapine LAI, which Teva is developing with Medincell, which is injected once a month to treat schizophrenia. Teva CEO Richard Francis said the trial had reached its endpoints, and there was a high probability it would allow effective long-term treatment for schizophrenia, without the side effects of PDSS.
If the drug reaches the market, it could contribute significantly to Teva's results. Evercore ISI analyst Omar Rafat believes sales could reach more than $1 billion annually, which would boost Teva's EBITDA. He says the story of Teva today is dramatically different than it was several years ago.
UBS believes Olanzapine's annual sales could reach $875 million by 2030. The Swiss bank's analysts give Teva stock a “buy” recommendation and a target price of $19, a 20.7% upside from the company's current stock price. UBS expects Teva's 2024 revenue to reach $16.1 billion with EBITDA of $4.9 billion, which is above the analyst consensus and in the middle range of Teva's own forecasts.
Jefferies gave Teva a $17 price target, an 8% upside for the Israeli pharmaceutical company, and a “buy” recommendation. Jefferies analysts believe Teva's share is undervalued and its current price gives little credit to its product pipeline, perhaps due to Teva's history in recent years. “We believe the market has not fully understood the change in Teva's DNA,” they wrote. “We believe today's announcement (about the trial results) and other announcements in the future about the product pipeline could reflect a change.”
Leader Capital Markets yesterday raised its price target on Teva from $16 to $18 (14.4% higher than current price) with an “outperform” recommendation. According to Lead Research Director Sabina Levy, Teva's first-quarter revenues were higher than expected, thanks to the strong performance of its generics business and growth of nearly 8% in the U.S. In addition, Teva delivered higher than expected. Expected revenues from the sale of Austedo branded drugs.
Published by Globes, Israel Business News – en.globes.co.il – on May 9, 2024.
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