Goldman Sachs started coverage of

Teva Pharmaceuticals

(Nasdaq, TASE:TEVA) with a Market Outperform rating.

In a research note, analysts Shimon Levy and Vikram Sahu wrote that they see the Israeli drugmaker's stock as "attractive" in the long run.

"Given its large pipeline and approval flow, we believe Teva will deliver 15% pa (per annum) organic growth in the next 2-3 years," they wrote. The company has the largest generic pipeline in the industry, they noted.

On the company's 2002 results, they expect revenues of $2.35 billion, up 13% from 2001. Estimated profit is $355.7 million, 24% above the company's 2001 earnings.

Other analysts have been saying that Teva's multiple is excessive, compared with its peers. Teva trades at 20 times its estimated earnings in 2003 ($3.15 EPS), compared with peer companies trading at about 14 times their estimated 2003 EPS. But the Israeli company's multiple is justified, Levy and Sahu wrote, given its pipeline.

The company habitually beats average analyst forecasts, the analysts noted.

Among the reasons to keep Teva stock in the long run, they note its pipeline, its reputation with the FDA, its access to long-release drug technology.

Teva's chemicals division is also a key asset, they noted, especially as patents on proprietary drugs run out and generic drugmakers need increasing amounts of raw materials to make the generic versions.

The main risk the share faces, the two wrote, is that at Teva's current valuation, it has no room for mistakes. The company must continue to meet forecasts, meaning it has to double its 2001 sales within four years, while doubling its profits in three years.

Assuming Teva makes no new acquisitions in the coming year, it will end next year - 2003 - with revenue of $2.72 billion, they predict, 16% more than 2002. They see its net profit growing to $429.1 million.

Teva today trades at $62.4. If it drops below $60, they write, "we would be more aggressive buyers".