Teva Pharmaceuticals

(Nasdaq:TEVA) stock has lost 27% of its value this year. Too much, says investment house

Salomon Smith Barney


Teva is trading at a 20% discount compared with its peers in the United States sopecialty pharmaceutical sector, the analysts write. With this in mind, SSB yesterday upgraded its rating of the stock from Market Perform to Outperform, Medium Risk.

But the investment house cut Teva's price target from $67.5 to $64, 20% above its current market level. The $64 share price extrapolates to a market cap of $6.61 billion.

Last week

Lehman Brothers

(NYSE:LEH) reiterated its Buy rating of Teva and its price target of $83.

Analysts Robert Bonte-Friedheim and Paulo Zaniboni predict earnings per share for 2001 of $1.8, up 31% from projected 2000 EPS and similar to the $1.9 EPS predicted by Lehman Brothers. SSB further predicts that EPS for 2002 will come to $2.17, up 20% from 2001.

TheStreet Recommends

Worries about economic improvement in 2001

The year 2000 smiled on drug companies, SSB notes. Investors fled from risky tech to old-style growth stocks. But if investors regain confidence in the macro, thanks to lower interest rates, declining crude oil prices and a tax cut, they may choose to reenter sectors susceptible to economic policy. Pharmaceuticals may suffer, and Teva too.

That said, among the good points SSB's analysts see in Teva are its momentum in launching new generic drugs, and the market domination of Copaxone - used in the treatment of multiple sclerosis - in the United States. It is still the number two drug out of three by market share, but the analysts believe Copaxone will be a hit in Europe, where it should be launched during the first half of this year.

Copaxone sales in the U.S. totaled $249 million in 2000, a gain of 55%. The drug's overall market share in the multiple sclerosis drugs market stood at 26% in the fourth quarter of 2000.

The analysts predict that Copaxone's European market share will be similar to its American market share. During 2001 Teva be holding advanced clinical tests of an oral version of Copaxone.

Meanwhile, the analysts predict that Teva's revenues in 2001 and 2002 will exceed its peer companies due to Teva's firm standing in generic drugs. In 2000, Teva introduced ten new generic drugs into the U.S. It is expected to begin marketing eight to ten more generic drugs during 2001.

Teva is meanwhile negotiating to acquire the 50%

Aventis Pharmaceuticals

(NYSE:AVE) owns in

Teva Marion Partners

, which markets Copaxone in the United States. Teva owns the other half of the company.