UPDATE: BofA Securities Upgrades Teva Pharma (TEVA) to Buy

(Updated - August 5, 2022 6:31 AM EDT)

BofA Securities analyst Jason Gerberry upgraded Teva Pharma (NYSE: TEVA) from Neutral to Buy with a price target of $13.00 (from $10.00).

The analyst comments "We are upgrading TEVA to Buy from Neutral as we alter our sector ratings distribution. In the aftermath of TEVA’s opioid settlement announcement, we believe TEVA is making material progress towards cleaning up its legal litigation overhangs which along with a solid 2023-24 new product cycle should be enough to shift the company back toward EBITDA growth. In terms of valuation, we still believe TEVA has room to re-rate driven by finalization of opioid settlements coupled with broader net debt de-leveraging on EBITDA growth. Within the lower growth spec pharma names, we believe TEVA has the most room to re-rate given improving optimization of the cost structure and free cash flow generation. With Austedo (movement disorders) likely to retain its competitive positon in the VMAT2 category coupled with several biosimilar launches planned in 2023-24 we believe there’s enough visibility in the portfolio to bring TEVA to low-SD EBITDA growth in ’23-24E while the opioid resolution should allow the company to start investing in growth. Last, while a CEO handoff is largely expected in 2023, we believe the current CEO will have largely accomplished his goals of right-sizing the cost structure and resolving key legal liabilities. We adjust our valuation multiple to 8.25x (same as OGN; from 7.5x) 2023 EV/EBITDA, raise our PO from $10/sh to $13/sh."

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 $10.12 yesterday.

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