Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) saw its share price jump 12.8% yesterday, amid high trading volume, to a five-year high. The share price of $15.74 gave a market cap of $17.8 billion, after the company reported first quarter results of $3.81 billion revenue, a GAAP net loss of $139 million and a non-GAAP net profit of $548 million.
Investors liked the fact that Teva reaffirmed its annual outlook and beat the revenue guidance for the quarter due to better than expected sales in the US generics market. The share surged even though earnings per share was lower than analysts' expectations.
But what particularly enthused the market was the positive Phase III clinical trial results of Olanzapine LAI, which Teva is developing with Medincell, and which is injected once a month for the treatment of schizophrenia. Teva CEO Richard Francis said that the trial had met its end points and there was a good likelihood that it would allow long-term effective treatment for schizophrenia, without PDSS side-effects.
If the drug reaches the market it could significantly contribute to Teva's results. Evercore ISI analyst Umer Raffat believes that sales could amount to more than $1 billion annually, which would enhance Teva's EBITDA. He says that Teva's story today is significantly different than several years ago.
UBS believes that annual sales of Olanzapine could reach $875 million by 2030. The Swiss bank's analysts' give a "Buy" recommendation for Teva's share and a price target of $19, a 20.7% upside on the company's current share price. UBS sees Teva's 2024 revenue reaching $16.1 billion with EBITDA of $4.9 billion, higher than the analysts' consensus and in the middle range of Teva's own outlook.
Jefferies gives Teva a target price of $17, an 8% upside for the Israeli pharmaceutical company, and a "Buy" recommendation. Jefferies' analysts think that Teva's share is undervalued and its current price attributes little credit to its product pipeline, probably due to Teva's history in recent years. "We think the market has not fully digested Teva's change in DNA," they write. "We believe that today's announcement (about the trial results) and further announcements in the future about the product pipeline can reflect a change."
Leader Capital Markets yesterday raised the price target for Teva from $16 to $18 (14.4% higher than the current price) with an "Outperform" recommendation. According to Leader research department director Sabina Levy, Teva's revenue in the first quarter was higher than expected, thanks among other things to the strong performance of the generics business and growth of about 8% in the US, and in addition, Teva presented higher than expected revenue from the sale of branded drug Austedo.
Published by Globes, Israel business news - en.globes.co.il - on May 9, 2024.
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