Investments house Lehman Brothers (NYSE:LEH) updated its coverage of generic drugs giant Teva Pharmaceuticals (Nasdaq:TEVA) with a Strong Buy rating. The bank set Teva's 12-month price target at $87, 30% above the market.
Teva's earnings per share will increase by 30% a year in 2002 and 2003, Lehman Bros. Predicts. It expects revenue of $2.1 billion in 2001.
Lehman Bros. believes that its target reflects Teva's consistently strong quarterly results, steady growth, and growth potential, as well as its competent executive team.
Lots of drugs are nearing the end of their patent term, the bank writes, creating great growth potential for Teva.
On the flip side, the analysts note that the generic drugs market is fiercely competitive, and some of Teva's products have a short lifespan. Generic drugs account for 80% of Teva's revenue. Yet the analysts predict that Teva can maintain its leadership in the generic drugs industry, based on its acquisitions policy.
On August 13 Teva announced a $300 debt issue. It is in talks to acquire the injectables unit of the Australian firm F.H. Faulding (Australia:FXF:AX) for $350 million.
Lehman Bros. led Teva's debt issue and was involved in several other Teva transactions.