Teva will beat Q2 forecasts by 4 cents, predicts Nessuah Zannex

Drugmaker isn't expensive versus peers because it is growing faster, says Haim Israel
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Teva Pharmaceuticals (Nasdaq:TEVA)

(TEVA) - Get Report

earnings will beat the average analyst forecast for the second quarter of 2002 by four cents, predicts Tel Aviv-based investment house Nessuah Zannex.

Chief analyst Haim Israel reiterated a Buy rating and price target of $79 for the Israeli drugmaker.

He predicts Teva will report 11.3% revenue growth in the second quarter to $572 million, and earnings of 66 cents per share. His forecast is 4 cents above the average analyst estimate of 62 cents EPS.

Nessuah Zannex foresees second-quarter sales of Copaxone, Teva's treatment for relapsing-remitting multiple sclerosis, at $116 million. Of that, $100 million sales will be generated in the United States, Israel estimates.

Teva has launched ten new products this year that should generate $350 million revenue a year, Israel says. Five of the products, which were introduced in the second quarter, should generate $35 million revenue for the quarter.

Teva stock has hurt from the general negative sentiment for pharmas, after the scandals surrounding Merck, Bristol-Myers Squibbs, and Johnson & Johnson. But Israel sees the Israeli company's stock continuing to outperform its generic peers, and being a top pick when investor affection returns to the drug sector.

Teva's multiple may seem high compared with its peers, Israel says. But when factoring in the company's expected growth rate, the company is not expensive, he concludes.

Teva's net earnings are expected to grow by 24% to 25% over the next five years, compared with an average pace of 13% by its competitors. That gap justifies its relatively high multiple, Israel says.