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Why Teva's (TEVA) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of Teva Pharmaceuticals (TEVA) are higher by 6.29% to 52.56, as the U.S. Supreme Court today decided that it will hear an appeal filed by the Israel-based pharmaceutical and drug company that develops, produces and markets generic drugs in all treatment categories.

The company is in a patent fight over its best selling multiple sclerosis drug Copaxone, a move that could see generic manufacturers steer away from introducing cheaper versions onto the market as soon as this May.

Copaxone is a branded drug of Teva's that makes up some 20% of its sales and about 50% of profits.

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TheStreet Ratings team rates TEVA PHARMACEUTICALS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TEVA PHARMACEUTICALS (TEVA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TEVA's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Pharmaceuticals industry average. The net income increased by 18.8% when compared to the same quarter one year prior, going from $320.00 million to $380.00 million.
  • The gross profit margin for TEVA PHARMACEUTICALS is rather high; currently it is at 61.14%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TEVA's net profit margin of 6.99% significantly trails the industry average.
  • The current debt-to-equity ratio, 0.54, 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 0.54, displays a potential problem in covering short-term cash needs.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: TEVA Ratings Report

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