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Why Wall Street Has Mixed Opinions on Teva Pharmaceutical

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Analysts’ recommendations and target prices

Wall Street analysts expect an upside potential of 24.43% for Teva Pharmaceutical (TEVA), based on the company’s closing price on March 22. In 2019, analysts have revised the company’s target price downward twice, from $22.47 in January to $20.84 in February and to $20.32 in March. The current consensus analyst recommendation for the stock is “hold.”

For the key growth drivers in fiscal 2019, see What Are Teva Pharmaceutical’s Key Growth Drivers in 2019?

Of the 24 analysts covering Teva Pharmaceutical, two recommend a “strong buy,” three recommend a “buy,” 17 recommend a “hold,” and the remaining two recommend a “sell.” The highest target price estimate for the company is $30, and the lowest is $13.

On March 22, Teva Pharmaceuticals closed at $16.33, 4.39% lower than its previous closing price, 11.93% higher than its 52-week low of $14.59, and 37.10% lower than its 52-week high of $25.96. The company’s market capitalization is $17.98 billion.

Based on its closing price on March 22, Teva Pharmaceutical has reported returns of -1.09% in the last week, -5.33% in the last month, and 0.25% in the last quarter. The company has reported returns of -33.73% in the last half-year, -7.22% in the last year, and 5.90% year-to-date.

Copaxone problems

According to the company’s fourth-quarter earnings conference call, Teva Pharmaceutical expects fiscal 2019 to be a trough year for its revenues. This forecast is mainly due to generic erosion of its Copaxone brand, both for its 20 mg and 40 mg formulations. 

On its fourth-quarter earnings conference call, Teva estimated a decline in Copaxone scripts close to 20% while its reduced pricing is expected to have affected the drug’s revenues by around 25% in fiscal 2018. The company reported Copaxone revenues of $2.4 billion in fiscal 2018, a year-over-year decline of 36.84%. According to Teva’s fourth-quarter earnings conference call, the company expects generic erosion to further reduce Copaxone sales to $1.5 billion in fiscal 2019.

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