Teva (TEVA) May Be One of the Cheapest Pharmas Right Now - Barron's
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Teva Pharmaceuticals (Nasdaq: TEVA) is trading stronger Friday morning, as Barron's makes a case for adding a little pharma to your portfolio.
Slumping 27 percent in 2011, Teva shares are trading for 7 times forward earnings, some the cheapest valuation they've ever had, amid a $200 billion global market for low-priced versions of branded-prescription medications that Barron's says "will nearly double over the next five years."
Barron's also contends that Teva will see massive upside from the growth, doubling its top-line by 2015.
For 2011, the Street sees Teva earnings $5.06 per share, increasing that 12 percent for 2012, and popping to a comfortable $7 per share in 2015.
One analyst notes that investors buying Teva now are getting the equivalent yield to a 10-year Treasury and "a call option on a global increase in the penetration of generic drugs." Leerink Swann initiated the stock at Outperform earlier in August. Needham & Co. also made bullish comments just a few days ago, maintaining a Strong Buy rating and $58 price target on the shares.
Others echo the sentiment, with another analyst saying Teva is making smart acquisitions that it's just not getting credit for. In May, Teva announced plans to acquire Cephalon (Nasdaq: CEPH) in a $6.8 billion deal. According to Barron's, the deal will double "sales of branded-prescription pharmaceuticals to $7 billion and create a pipeline with more than 30 compounds in late-stage trials."
Teva reaps the fruits of expiring patents, not unlike peers Mylan (NYSE: MYL) and Novartis (NYSE: NVS). Teva is also a go-to as pressure mounts in the U.S. and globally to cut health care costs.
Of it's total, generic sales make up about 70 percent of Teva's revenues. One brand name drug, Copaxone, added an additional $3 billion to that in 2010.
Sales of $16 billion in 2010 make it the world's 11th largest pharma, and expected sales of $18.5 billion for fiscal 2011, and plans to accelerate revenue growth to $31 billion by 2015, Teva may be just what the doctor ordered.
Slumping 27 percent in 2011, Teva shares are trading for 7 times forward earnings, some the cheapest valuation they've ever had, amid a $200 billion global market for low-priced versions of branded-prescription medications that Barron's says "will nearly double over the next five years."
Barron's also contends that Teva will see massive upside from the growth, doubling its top-line by 2015.
For 2011, the Street sees Teva earnings $5.06 per share, increasing that 12 percent for 2012, and popping to a comfortable $7 per share in 2015.
One analyst notes that investors buying Teva now are getting the equivalent yield to a 10-year Treasury and "a call option on a global increase in the penetration of generic drugs." Leerink Swann initiated the stock at Outperform earlier in August. Needham & Co. also made bullish comments just a few days ago, maintaining a Strong Buy rating and $58 price target on the shares.
Others echo the sentiment, with another analyst saying Teva is making smart acquisitions that it's just not getting credit for. In May, Teva announced plans to acquire Cephalon (Nasdaq: CEPH) in a $6.8 billion deal. According to Barron's, the deal will double "sales of branded-prescription pharmaceuticals to $7 billion and create a pipeline with more than 30 compounds in late-stage trials."
Teva reaps the fruits of expiring patents, not unlike peers Mylan (NYSE: MYL) and Novartis (NYSE: NVS). Teva is also a go-to as pressure mounts in the U.S. and globally to cut health care costs.
Of it's total, generic sales make up about 70 percent of Teva's revenues. One brand name drug, Copaxone, added an additional $3 billion to that in 2010.
Sales of $16 billion in 2010 make it the world's 11th largest pharma, and expected sales of $18.5 billion for fiscal 2011, and plans to accelerate revenue growth to $31 billion by 2015, Teva may be just what the doctor ordered.
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