2017 Seen as a Challenge for Teva (TEVA), But Sticking with 'Buy' - Maxim

Maxim Group analyst Gabrielle Zhou lowered her price target on Teva Pharma (NYSE: TEVA) to $52.00 (from $72.00) but maintained a Buy rating following results. The firm sees 2017 as a challenge.

Zhou commented:

• Teva reported 3Q16 with total revenues of $5.6B, with $2.9B in generic product revenues, including $887M from the Actavis generic business (transaction completed on Aug. 2, 2016). Total generic revenues increased 26% sequentially, compared to $2.3B in 2Q16. Specialty revenues were $2B, down 10% versus $2.3B in the last quarter, as a result of lower revenues across core therapeutic areas. Total Copaxone revenues were $1.1B, flattish compared to 2Q16. Copaxone U.S. sales were $874M, down 9% from $955M in the last quarter. Teva ended the quarter with $2.7B in cash but $36.9B in debt due to the $20B debt issuances to finance the Actavis acquisition.
• Lower 2016 guidance. Teva cut its full-year guidance: its revenues estimate is now $21.6B to $21.9B, from $22B to $22.5B; non-GAAP EPS $5.10 to $5.20, from $5.20 to $5.40 previously (based on weighted average shares of 1,020M). Teva also provided 4Q16 guidance on revenues of $6.2B to $6.5B; non-GAAP EPS $1.34 to $1.44. The lowered YE forecasts reflect delays for some new launches that have been pushed back by a year. Teva expects to launch its generic EpiPen in early 2018. We see this as positive for Adamis (ADMP—$2.85—Buy).
• It's worth noting that the company disclosed it set aside a $520M reserve as it is in talks with the U.S. Department of Justice and the SEC in relation to potential violations of foreign corruption laws.
• Teva realized quarterly growth in its generic business predominantly driven by the Actavis acquisition. However, its organic business decreased in both the generic and specialty franchises. Teva has been active on the BD front in the past year, and now the focus has shifted to developing organic growth and realizing acquisition-related synergies.

For an analyst ratings summary and ratings history on Teva Pharma click here. For more ratings news on Teva Pharma click here.

Shares of Teva Pharma closed at $37.60 yesterday.

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