Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) is scheduled to release its second-quarter financial results before the markets open on Thursday. This company has so far been unable to escape its rough patch in 2016. There now may be some light at the end of the tunnel with recent M&A news and earnings on the horizon.
The consensus estimates from Thomson Reuters are calling for $1.20 in earnings per share (EPS) on $4.87 billion in revenue. The company posted EPS of $1.43 and $4.97 billion in revenue in the year-ago period.
Just recently, the company announced that it entered into a definitive agreement to purchase the Allergan PLC (NYSE: AGN) subsidiary Anda, the fourth largest distributor of generic pharmaceuticals in the United States for $500 million. Management believes that this strategic move will enable the company to improve its capabilities and flexibility given the changes in the pharma industry. The company further expects to benefit by leveraging its size and scale as the largest producer of medicines in the world.
24/7 Wall St. views Teva as a stock to own for a decade for a few reasons. Teva has been another laggard in the group versus the market since 2010, but what Teva has going for it on top of a branded portfolio is being the world’s most dominant player in generic drugs.
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Teva has doubled its dividend in the past five years. It is also valued at about 10 times earnings. The 2016 election rhetoric around drug prices remains a risk, but this has happened before, and generic drugs are only going to see their shares of all drug prescriptions rise through time. Saving money in drugs at a time when health care costs are rising is a must.
A few analysts weighed in on Teva ahead of the earnings report:
- Jefferies reiterated a Buy rating.
- Credit Suisse reiterated a Neutral rating.
- JPMorgan reiterated an Overweight rating with a $75 price target.
- Mizuho reiterated a Buy rating.
- RBC Capital Markets reiterated an Outperform rating with a $71 price target.
- Maxim reiterated a Buy rating.
- HSBC has a Buy rating.
- Piper Jaffray reiterated a Neutral rating with a $53 price target.
- Oppenheimer has an Outperform rating with a $72 price target.
- Citigroup reiterated a Buy rating with a $75 price target.
So far in 2016, Teva has underperformed the broad markets, with the stock down about 18%. Over the past 52 weeks, the number gets worse and the stock is down about 22%.
Shares of Teva were trading up 1% at $53.51 on Wednesday, with a consensus analyst price target of $70.19 and a 52-week trading range of $48.01 to $71.68.
Allergan traded up 1.6% to $254.80, within a 52-week range of $195.50 to $339.00. The consensus price target is $291.44.
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