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What’s Pulling Down Teva Pharmaceutical Stock?

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Jun. 3 2019, Published 11:02 a.m. ET

Share price movements

On May 31, Teva Pharmaceutical (TEVA) closed at $8.65, 2.15% lower than the previous close, -0.69% lower than its 52-week low price of $8.71, and 66.68% lower than its 52-week high price of $25.96. The stock has been down by 21.65% in the last week and by 43.90% in 2019 YTD.

The downfall in Teva’s stock prices in the last week of May was triggered by the press release announcing the company’s settlement with the state of Oklahoma for a one-time payment of $85 million. Although the company has vehemently refuted its role in the opioid crises in Oklahoma, investors are not buying this argument and fear the possibility of higher fines in the coming months. The fears were further aggravated by the downgrade of the stock from “buy” to “neutral” as well as the reduction in the target price from $22 to $12 by UBS analyst Navin Jacob.

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In the coming months, Teva Pharmaceutical will be facing a federal court trial in Cleveland related to multiple opioid abuse cases. On May 11, 44 US states filed a lawsuit alleging Teva Pharmaceutical of price collusion for inflating drug prices with 19 other pharmaceutical companies. The increasing litigation expenses are becoming a significant burden to the company, which carries cash assets of only $1.97 billion and long-term debt of $26.26 billion on its balance sheet.

Analysts’ recommendations and target price

The consensus recommendation for Teva Pharmaceutical is a “hold.” Wall Street analysts expect an upside potential of 95.95% for Teva Pharmaceutical based on the company’s closing price on May 31. Analysts have gradually reduced the company’s 12-month consensus target price from $20.84 in February to $20.20 in March to $19.10 in April to $16.95 in May.

Out of 26 analysts covering Teva Pharmaceutical, one recommends a “strong buy,” three recommend a “buy,” 19 recommend a “hold,” and three recommend a “sell.”

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