Rating Change #1
Teva Pharmaceutical Industries Ltd (TEVA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 2.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that TEVA's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
- TEVA PHARMACEUTICALS's earnings per share declined by 10.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TEVA PHARMACEUTICALS increased its bottom line by earning $3.67 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($4.96 versus $3.67).
- The gross profit margin for TEVA PHARMACEUTICALS is rather high; currently it is at 58.60%. Regardless of TEVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TEVA's net profit margin of 21.10% compares favorably to the industry average.
Teva Pharmaceutical Industries Limited, a pharmaceutical company, develops, produces, and markets generic drugs; and proprietary branded pharmaceuticals in various therapeutic categories and active pharmaceutical ingredients worldwide. The company has a P/E ratio of 9.3, below the average drugs industry P/E ratio of 13 and below the S&P 500 P/E ratio of 17.7. Teva has a market cap of $41.25 billion and is part of the health care sector and drugs industry. Shares are up 11.2% year to date as of the close of trading on Tuesday.You can view the full Teva Ratings Report or get investment ideas from our investment research center. -- Reported by Kevin Baker in Jupiter, Fla.
For additional Investment Research check out our Ratings Research Center. For all other upgrades and downgrades made by TheStreet Ratings Model today check out our upgrades and downgrades list.
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