Just two months after surprising the market by lowering Teva Pharmaceuticals (Nasdaq: TEVA) from "strong buy" to hold, investment bank UBS Warburg has changed its mind, saying Monday that it increased investment ratings on four generic drug makers, including the Israeli giant, based on an improved outlook for 2003 with new products challenging drugs that are losing patent protection.
Analyst Steven Valiquette said in a research note he raised Teva Pharmaceuticals and Alpharma to "strong buy" from hold, while IVAX Corp and Mylan Laboratories were raised to "buy" from "hold."
An estimated $18 billion of branded drugs could face generic competition in 2003, giving generic drug makers a large opportunity, Valiquette said.
"We are predicting EPS growth of 47% for the six broad-based generic companies in 2003, versus EPS growth of only 8% for the same group of companies in 2002," Valiquette said. He included Barr Laboratories and Watson Pharmaceuticals in that calculation.