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Why Is Teva Pharmaceutical Projecting a Revenue Trough in 2019?

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Revenue performance in 2018

In its fourth-quarter earnings investor presentation, Teva Pharmaceutical (TEVA) guided for revenue of $17.0 billion–$17.4 billion in 2019. According to Teva’s fourth-quarter earnings conference call, it expects 2019 to be a trough year in terms of revenue and operating profit.

In 2018, Teva Pharmaceutical reported revenue of $18.85 billion, a YoY (year-over-year) fall of 15.77% but in line with its latest guidance. In 2018, the company reported multiple upward revisions to its 2018 revenue guidance, from $18.3 billion–$18.8 billion in February 2018 to $18.5 billion–$19.0 billion in May and August and finally to $18.6 billion–$19.0 billion in November.

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Wall Street projections

Analysts expect Teva Pharmaceutical’s revenue to fall 12.44% YoY to $4.44 billion in the first quarter and 7.45% YoY to $17.45 billion in 2019. They then expect it to rise 0.05% YoY to $17.46 billion in 2020 and 1.74% YoY to $17.76 billion in 2021.

According to Teva Pharmaceutical’s fourth-quarter earnings call, its recently launched products, including Austedo and Ajovy, are expected to be key revenue drivers for it in 2019. Ajovy reported $3.0 million worth of revenue in 2018 and is expected to report sales of close to $150 million in 2019. The company expects this performance to be driven by the anticipated rapid uptake of the chronic migraine drug, which has proved effective in reducing the number of migraine days by 50%, 75%, and even 100% for certain patients.

Austedo reported $204 million in revenue in 2018 and is expected to report sales of close to $350 million in 2019. According to Teva’s fourth-quarter earnings call, while the drug has a solid position in terms of movement disorders associated with Huntington’s disease, it’s also expected to see a rapid uptake in tardive dyskinesia indications in the coming years.

In its fourth-quarter earnings presentation, Teva guided for a revenue impact of -$300 million on its sales, especially in Europe and other international markets due to the negative impact of foreign exchange.

Next, we’ll discuss EPS projections for Teva Pharmaceutical in 2019.

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