Why Teva (TEVA) Stock Is Lower

NEW YORK (TheStreet) -- Shares of Teva Pharmaceuticals (TEVA) are down -1.67% to $50.00 in pre-market trade after U.S. Supreme Court Chief Justice Roberts rejected the company's bid to block generic versions of its Copaxone multiple sclerosis drug while the court hears the company's appeal in a patent fight, Bloomberg BusinessWeek reports

That leaves Teva open to generic competition as soon as next month. Mylan Inc. (MYL), Momenta Pharmaceuticals Inc.  (MNTAand Novartis's  (NVS) Sandoz are positioned to start selling generic Copaxone klaste next month, although they would risk having to pay damages if Teva ultimately wins its patent-infringement case, the publication said.

Over 50% of Teva's profit comes from the sale of Copaxone, from $3.32 billion in annual U.S. sales.

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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 multiple strengths, 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, expanding profit margins, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and growth in earnings per share. 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 0.7%. 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 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.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.13% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • TEVA PHARMACEUTICALS has improved earnings per share by 21.6% 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 reported lower earnings of $1.50 versus $2.24 in the prior year. This year, the market expects an improvement in earnings ($4.63 versus $1.50).
  • You can view the full analysis from the report here: TEVA Ratings Report

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