Merrill Lynch and Goldman Sachs on Monday updated its position on Teva Pharmaceuticals (Nasdaq,TASE:TEVA) after the company's upside surprise in its second-quarter financial statement.
Merrill analyst Paul Woodhouse maintained a Strong Buy rating for the Israeli drugmaker, and raised estimates on the company's strong second-quarter showing.
Teva netted 68 cents per share in the second quarter, versus Merrill Lynch's expectation of 65 cents and the consensus estimate of 62 cents.
For 2002 Woodhouse sees Teva earning $2.65 to $2.75 per share, rising to $3.13 to $3.15 in 2003. These figures do not incorporate sales of Augmentin or remeron, he emphasizes. The painkiller Augmentin alone could add 25-30 cents in a year, or more, he adds.
Woodhouse's new earnings figure is $370 million for 2002 and $425 million for 2003.
"In our opinion, Teva's business model is functioning well," Woodhouse concludes, as the company manages to extract increasing value from its base business and has a strong research pipeline.
Teva chief executive Israel Makov yesterday stated that the company has the biggest pipeline in the generic industry, with 62 drugs awaiting FDA approval.
Goldman maintaining Market Outperform rating
Goldman Sachs maintained its Market Outperform rating. "The second quarter results are further proof that management can continue to deliver," Goldman analyst Vikram Sahu wrote.
The bank did not change its revenues estimates for the year, but will review its position when Teva reports more approvals.
Sahu concurred with Israeli analysts that Teva's premium compared with its peers is justified. "Teva is trading at 20 times our 2003 estimated EPS of $3.15," Sahu wrote, while peers are trading at 14 times estimated 2003 EPS. "We believe this multiple is justified based on our analysis of its pipeline, history and track record."