Teva Pharmaceutical’s net profit margins
By improving the profitability of its generics segment and managing the life cycles of its specialty franchises effectively, Teva Pharmaceutical Industries (TEVA) is expected to boost its net profit margins in 2016. Additionally, the company’s strategy of continuously upgrading and optimizing its global infrastructure and focusing on strong cash flows is also expected to drive its profitability in future years.
Wall Street analysts have projected a rise in Teva’s net profit margins, from 13.8% in 2015 to 24.3% in 2016. If these projections prove correct, there will be a significant positive impact on Teva’s share prices. There will also be a positive impact on the share price of the Vanguard FTSE All-World ex-US ETF (VEU). Teva accounts for 0.17% of VEU’s total portfolio holdings. In 2016, analysts expect peers Perrigo (PRGO), Pfizer (PFE), and Mylan (MYL) to earn net profit margins of about 22.5%, 27.6%, and 23.7%, respectively.
Teva (TEVA) has estimated that the company’s total revenues will grow at a CAGR (compound average growth rate) of about 12.5% between 2015 and 2018, while its EBITDA (earnings before interest, tax, depreciation, and amortization) will grow at a CAGR of 20% in the same time period.
Additionally, the company also expects to raise its free cash flow and cash flow from operations at a CAGR of 20% between 2015 and 2018. This indicates that Teva could generate a free cash flow in the range of $20 billion to $25 billion between 2016 and 2018. Teva is expected to use this cash to reduce its debt while focusing on growth initiatives such as geographic market expansion and business development activities in specialty disease segments.