Teva Pharmaceuticals (TEVA) Stock Higher on Rating Upgrade
NEW YORK (TheStreet) -- Teva Pharmaceuticals (TEVA) - Get Report stock is gaining by 1.15% to $62.41 in late-afternoon trading on Monday, following a rating upgrade to "buy" from "neutral" at Goldman Sachs.
The firm maintained its $75 price target on the stock.
Teva's multiple sclerosis drug Copaxone has been outperforming amid generic competition, Goldman Sachs said in a note, Barron's reports. Additionally, Teva recently quantified Copaxone's downside risk, which balances any concern about generic competition.
The global pharmaceutical and drug company's proposed acquisition of Allergan's (AGN) generic business could put it in "a position to dominate the generics market," the firm adds, according to Barron's.
"While new significant pipeline launches are still 2-3 years away, we expect clinical data points, starting in mid-2016, to drive increased confidence, leading to the potential for P/E expansion," the firm said in a note, according to Barron's.
Goldman Sachs added that Teva's "base business" isn't exposed to big price increases, which sets it apart from pharmaceutical companies recently accused of "price gouging."
Separately, 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 expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for TEVA PHARMACEUTICALS is rather high; currently it is at 63.84%. 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 2.13% significantly trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- TEVA PHARMACEUTICALS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 $3.56 versus $1.50 in the prior year. This year, the market expects an improvement in earnings ($5.43 versus $3.56).
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.48 is very weak and demonstrates a lack of ability to pay short-term obligations.
- TEVA, with its decline in revenue, slightly underperformed the industry average of 3.7%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: TEVA
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.