Merav Fischer Sharoni, Leumi Partners’ pharma analyst, responds to the publication of the reports and raises the recommendation for the stock from “missing return” to “market return”, at a target price of $ 12 per share (similar to the market price as of yesterday’s trading closing).
According to Fischer-Sharoni, “Teva reports matched market forecasts in the sales line, with the profit line being about 4% higher than the forecasts. It is difficult to relate the quarterly results in a comparative view as this quarter has absorbed the full impact of the corona virus outbreak, especially in the US market. As we observed, the pre-closure trend, which characterized the first quarter of the year, was partially offset by this quarter, probably mainly due to traffic restrictions, and ‘inventory surpluses’ among customers. Also in the source drug arena, which is the company’s main growth engine, there has been moderate growth relative to pre-corona forecasts, especially with the AJOVY drug, despite the launch of the automatic syringe, which should bring the drug in line with its competitors. It should be noted that the company noted that since the launch of the automatic syringe, there has been a significant growth in the volume of prescriptions for the drug AJOVY, so it is possible that growth rates later in the year will be higher.
“Teva presented a net cash flow of $ 582 million, which allowed a certain reduction of the net financial debt, to a level of $ 23.9 million. . The company reaffirmed its forecast for 2020, despite erosion in the second quarter.
“Teva’s main problem as of today remains its financial situation, and in light of two significant legal cases, which are being conducted simultaneously in the US, and could impose substantial fines on Teva, the uncertainty will continue, and the company’s risk profile remains very high.”