Teva Pharmaceutical (TEVA) earnings: tough competitive headwinds

1:53 pm ET, 01 Aug 2018

Teva Pharmaceutical Industries Limited (TEVA)  is expected to report earnings on August 2 before market open. The report will be for the fiscal quarter ending June 2018. Shares are trading at 23.73, up 2.55%.

What are TEVA earnings expectations?  What news should investors be paying attention to?

Copaxone and Austedo sales are exceeding analysts' expectations.   Also, the company's cost-saving efforts are noticeable.  The management estimates it can still launch chronic migraine drug fremanezumab by year-end following potential near-term resolution of regulatory issues at API manufacturer Celltrion. 

Despite some of the previous quarter’s decent performance and management raising its year-end outlook, Teva faces a tough road thanks to intensifying competition of Copaxone, potential ProAir generic competition later this year, and ongoing competitive headwinds in the U.S. generics market. Management also recognized near $700 million in impairments related to the Rimsa deal, restructuring initiatives, and termination of the OTC partnership with Procter & Gamble.

Teva’s cost-saving initiatives helped salvage profitability during the quarter, but generic competition on Copaxone will remain a challenge for the company.  A 40% and 23% decline in North American Copaxone and generic drug sales, respectively, drove the firm's 10% total revenue decline from last year, which includes a currency benefit and asset sales. Meanwhile, total revenue also benefited from international markets.

Teva Pharmaceutical Industries Limited has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Missed analyst EPS estimates by 9 cents ($1.02 actuals vs. $1.11 forecast) in FQ2’17;
  • Missed analyst EPS estimates by 5 cents ($1.00 actuals vs. $1.05 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 12 cents ($.93 actuals vs. $.81 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 26 cents ($.94 actuals vs. $.68 forecast) in FQ1’18.

For FQ2’18, EPS is expected to decline by 34% year-over-year to $.67, while revenue is expected to decline 16% year-over-year to $4.76 billion.  

Over the last month, Teva Pharmaceutical Industries Limited (TEVA) returned -2.43%.

Teva Pharmaceutical Industries Limited (TEVA) average analyst price target ($19.83) is -16.43% below its current price ($23.73).

For the latest price and information on Teva Pharmaceutical Industries Limited, please visit Finstead and search for "TEVA price" or "TEVA news".

Teva: Is The Stock In Trouble?

7:55 pm ET, 07 Feb 2018

Teva Pharmaceutical Industries (NYSE: TEVA) is expected to report its earnings tomorrow before market open.  The earnings release will be for the fourth fiscal quarter 2017.  According to Finstead Research, TEVA price target upside is -25.53% (visit Finstead and type "TEVA upside"). 

The underperformance of Teva shares is visible from its 43% annual price decline. Teva faces stiff competition because of the rise of FDA generic drug approvals, customer consolidation, as well as pricing pressures from US generic drug manufacturers.

Teva is facing patent challenges for the 40mg formulation of Copaxone. It had lost 30% on its fourth-quarter earnings due to Mylan’s launch of the generic Copaxone version. Four out of five orange book patents for Teva’s Copaxone 40mg have been invalidated by the U.S. District Court in January 2017.

Firms such as Mylan, Dr. Reddy’s, and Sandoz have been posting stiff competition to Teva when it comes to launching generic drugs.  The pressure for gaining market share is becoming more pronounced.

Teva has a huge debt burden that has increased its borrowing costs, and hence reduced the profit.

Strict regulations are a major obstacle for Teva to get an approval for its pipeline candidates.  Laquinimod failed to meet the primary endpoint for relapsing or remitting multiple sclerosis (RRMS) in the CONCERTO study.  There will be with no additional attempts to evaluate laquinimod for this indication.  Another setback for Teva was talampanel (in Phase 2), a drug supposed to treat Amyotrophic Lateral Sclerosis (ALS).

Here are some other worrisome developments for Teva: unsuccessful attempts in the expansion of Nuvigil’s label, termination of lutropin development, activities linked to growth hormones, and FDA’s hold on fasinumab’s Phase 2b study (fasinumab is supposed to treat chronic pain in the lower back).

Over the last year, TEVA returned -42.68%. This return is lower than Drug Manufacturers Industry (-12.03%), Healthcare Sector (27.15%), and S&P 500 (15.30%) returns.

Teva's Workforce Is Decimated: Now What?

1:05 pm ET, 15 Dec 2017

generic pharma

Teva (NYSE: TEVA) announced that it will be laying off 14,000 people, or 25% globally.  The stock is trading higher, about 6% mid-day. 

However, based on Finstead research, the Teva stock price upside is -15% (visit Finbot and type "TEVA upside").  That means the average analyst price target is 15% below the current price.

While the layoff decision is causing huge morale issues among Teva's remaining workforce, this decision is the right one in the eyes of Goldman Sachs analysts.  

There is some good news though.    

The Company now may be better equipped to compete in the US generics industry, which is facing significant pricing pressure.  The challenging times for the US generics market are expected to continue in the foreseeable future.  Drug price decline was 10% in the most recent quarter and it's expected to increase even more.  

In other words, the Company is down-sizing to get ahead of the tough market conditions.  

Fundamentally, S&P Capital IQ regards Teva as a solid company.  The quality of earnings and financial health are deemed high.  Also, from the stock price perspective, the Company is undervalued.  But growth stability is concerning. 

The eliminated jobs, decommissioned factories, and frozen dividend payouts will contribute to $3 billion in cost savings (5% of Teva's overall expenses).

Teva Pharmaceutical Industries Limited (TEVA) Stock Guide

Updated at: 5:39 pm ET, 02 Sep 2020

Before we start: if you're looking for TEVA stock price, you can quickly find it out by visiting Finny and typing "TEVA quote". If you're looking for a quick scoop on TEVA stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "TEVA". You'll get all this info in one place. Or you can just type "TEVA news" to get the latest stock news.

Looking to buy or sell Teva Pharmaceutical Industries Limited (TEVA)? Interested in getting the full scoop on TEVA, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this TEVA stock guide, we'll address key questions about TEVA, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are TEVA earnings?
2. When is TEVA earnings date?
3. What is TEVA stock forecast (i.e., prediction)?
4. TEVA buy or sell? What is TEVA Finny Score?
5. What are the reasons to buy TEVA? Why should I buy TEVA stock?
6. What are the reasons to sell TEVA? Why should I sell TEVA stock?
7. What are TEVA key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are TEVA earnings?

TEVA trailing 12-month earnings per share (EPS) is $0.00.

2. When is TEVA earnings date?

TEVA earnings date is undefined.

Analyst Predictions

3. What is TEVA stock forecast (i.e., prediction)?

Based on TEVA analyst price targets, TEVA stock forecast is $11.98 (for a year from now). That means the average analyst price target for TEVA stock is $11.98. The prediction is based on 26 analyst estimates.

The low price target for TEVA is $6.00, while the high price target is $17.00.

TEVA analyst rating is Hold.

Analysis

4. TEVA buy or sell? What is TEVA Finny Score?

#{finnyScore:64}Our quantitative analysis shows 7 reasons to buy and 4 reasons to sell TEVA, resulting in Finny Score of 64.

5. What are the reasons to buy TEVA? Why should I buy TEVA stock?

Here are the reasons to buy TEVA stock:

  • In December 2017, Teva announced a restructuring plan that will see more than 25% of the company’s global workforce being laid off over the next two years with the majority expected in 2018.
  • Teva is the world’s largest generic drug company in terms of both total and new prescriptions. The company enjoys a leading position in the United States., which is the world’s largest generic market, with a market share of 18% post the Actavis deal. In the global generics market, Teva commands 8% share.
  • Teva has several programs ranging from phase I to registration stage in its pipeline. Many of these pipline candidates are in the CNS and neurology fields. Important pipeline candidates include SD-809, fasinumab for osteoarthritis pain (phase III) and fremanezumab for prevention of chronic/episodic migraine (under review in the United States. – PDUFA date is June 2018 - and EU), chronic and episodic cluster headache (phase III) and post traumatic headache (phase II).
  • TEVA forward P/E ratio is 3.61, which is low compared to its industry peers’ P/E ratios. See TEVA forward P/E ratio chart.
  • TEVA Price/Book ratio is 0.75, which is low compared to its industry peers’ P/B ratios. See TEVA forward Price/Book ratio chart.
  • TEVA Price/Sales ratio is 0.60, which is low compared to its industry peers’ P/S ratios. See TEVA forward Price/Sales ratio chart.
  • TEVA PEG ratio (P/E adjusted for growth) is 1.18, which is low compared to its industry peers’ PEG ratios. See TEVA PEG chart.
  • TEVA average analyst price target ($11.98) is above its current price ($9.40). See TEVA price target chart.
  • TEVA Enterprise Value/Revenue multiple is 2.15, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See TEVA Enterprise Value/Revenue chart.
  • TEVA Enterprise Value/EBITDA multiple is 7.77, which is low compared to its industry peers’ Enterprise Value/EBITDA ratios. See TEVA Enterprise Value/EBITDA chart.

6. What are the reasons to sell TEVA? Why should I sell TEVA stock?

Let's look at the reasons to sell TEVA stock (i.e., the bear case):

  • The U.S. generics industry is facing significant competitive and pricing pressure, thereby affecting the company’s top-line performance. An increase in FDA generic drug approvals and ongoing customer consolidation are resulting in additional competitive pressure in the industry. The ongoing consolidation of customers in the generics industry led to increasing price erosion.
  • Glatopa, a generic version of Copaxone 20 mg, is being marketed by Momenta and Sandoz - Novartis’ generic arm - since 2015 while Mylan launched its version of the 20 mg formulation in October 2017.
  • Currency is eating into Teva’s revenues as well with exchange rate movements hurting overall revenues in 2017 by almost 4%.
  • The generic market is highly crowded and Teva faces competition from players like Mylan, Dr. Reddy’s, and Sandoz among others. Competition is fierce as generic companies strive to be the first to launch a generic version once a brand product loses exclusivity so that they can capture significant market share. Once additional generic companies enter the market, market share, revenues and gross profit typically decline.
  • The company incurred approximately $27 billion in debt to finance the Actavis Generics acquisition. Teva’s consolidated debt was approximately $32.5 billion at the end of 2017, much higher than approximately $10 billion at the end of 2015 (i.e. before acquiring Actavis Generics). However, cash and cash equivalents, at the end of 2017, were approximately $1.1 billion.
  • We note that clinical development involves a high degree of risk. Gaining approval for pipeline candidates has become more difficult, given the tough regulatory environment. Development and regulatory setbacks for late-stage pipeline candidates would be a major disappointment for the company.
  • TEVA quarterly revenue growth was -7.30%, lower than the industry and sector average revenue growth (0.17% and 0.83%, respectively). See TEVA revenue growth chart.
  • TEVA profitability is declining. The YoY profit margin change was -73.82 percentage points. See TEVA profitability chart.
  • TEVA short interest (days to cover the shorts) ratio is 3.08. The stock garners more short interest than the average industry, sector or S&P 500 stock. See TEVA short interest ratio chart.
  • TEVA cash to debt ratio is 0.09, lower than the average industry (0.13) and sector (0.16) cash to debt ratio. See TEVA cash to debt chart.

Key Stats

7. What are TEVA key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for TEVA:

Metrics TEVA
Price $9.29
Average Price Target / Upside $12.19 / 31.15%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Drug Manufacturers - Specialty & Generic
Sector Healthcare
Number of Employees 42,535
Market Cap $10.04B
Forward P/E Ratio 3.61
Price/Book Ratio 0.6
Revenue (TTM) $16.79B
YoY Quarterly Revenue Growth -7.30%
Profit Margin 0.02%

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