Deutsche Bank Upgrades Teva Pharmaceutical (TEVA) to Buy

July 21, 2008 8:15 AM EDT

Deutsche Bank upgrades Teva Pharmaceutical (NASDAQ: TEVA) from Hold to Buy and increases their price target from $47 to $56.

The upgrade is due to Teva's announced acquisition of Barr Pharmaceuticals (NYSE: BRL). The firm said, "We are upgrading Teva to BUY, given the enhanced growth prospects we see over the next four years from the proposed combination with Barr. We continue to believe Teva remains the premier generic drug company for a host of reasons, including mgt's excellent track record, its sizeable generic pipeline, and its key branded franchises. Coupled with Barr's strong new product cycle, we believe Teva once again merits a premium valuation as the "upside void" from the failed FORTE study should now be more than replaced with Barr's valuable assets."

The firm believes that strategically, the transaction makes a lot of sense because of the little overlap in the two companies' businesses. Also, Teva could benefit from Barr's significant operations in Eastern Europe. Overall, Deutsche Bank believes the combined entity "should be now considered the undisputed leader in biogenerics."

Teva Pharmaceutical Industries Limited develops, manufactures, and markets generic and human pharmaceuticals, as well as active pharmaceutical ingredients.

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