Research

TEVA – Market expectations are for Uniform ROA compression, and management may be concerned about products, operating income margin, and their Takeda venture

October 8, 2020
  • Teva Pharmaceutical Industries Limited (TEVA:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with an 11.3x Uniform P/E, implying bearish expectations for the firm. Furthermore, management may be concerned about the potential of their products, their ability to meet operating income margin outlook, and their venture with Takeda

  • Specifically, management may lack confidence in their ability to sustain free cash flow, meet their operating income margin target of 28%, and sustain Europe revenues. Moreover, they may have concerns about further weakness in COPAXONE and the potential of their biosimilar products in partnership with Alvotech. They may also have concerns about their ability to continue to grow their TRUXIMA business, as well as their digital, products, and respiratory space. They may also be exaggerating the potential of AJOVY, have concerns about the arthropathies increase in Fasinumab,    and the potential of their business venture with Takeda. Furthermore, they may lack confidence in their ability to continue improving AUSTEDO performance, become a leader in generics and biopharmaceuticals, and sustain GAAP net income