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TEVA Q4 Earnings and Revenues Surpass Estimates, Stock Up
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Teva Pharmaceutical Industries Limited (TEVA - Free Report) reported fourth-quarter 2023 adjusted earnings of $1 per share, which beat the Zacks Consensus Estimate of 75 cents per share. Earnings rose 41% from 71 cents per share reported in the year-ago quarter.
Revenues for the fourth quarter came in at $4.46 billion, which beat the Zacks Consensus Estimate of $3.97 billion. Total revenues rose 15% on a reported basis and 14% on a constant currency basis. Sales growth was mainly driven by the $500 million upfront payment received in connection with the October 2023 collaboration with Sanofi (SNY - Free Report) for its anti-TL1A asset. Per the agreement, Teva and Sanofi will equally share the development costs globally.
Higher revenues from Austedo in the North America segment and generic products globally also contributed to the growth. However, the uptick in revenues was partially offset by lower sales of generic products and Anda in the North America segment and lower sales of Copaxone.
Teva Pharmaceutical Industries Ltd. Price, Consensus and EPS Surprise
The company reports through the following segments based on three regions — North America (comprising the United States and Canada), Europe and International markets.
North America segment sales were $2.37 billion, up 18% year over year, mainly due to the upfront payment from Sanofi and the increase in sales of newer branded drugs, Austedo and Ajovy. The uptick was partially offset by lower sales of certain legacy brands like Copaxone, Bendeka/Treanda and generic products. In the United States, sales increased 18% from the prior-year quarter to $2.27 billion.
Generic/biosimilar product revenues declined 8% from the year-ago period to $754 million in the North American segment due to increased competition for some generic products. Generic revenues missed our model estimate of $799 million as well as the Zacks Consensus Estimate of $822 million.
Huntington's disease drug, Austedo, recorded sales of $408 million in North America, up 19% year over year. Sales were mainly driven by volume growth, as prescription trends continued to increase and by the launch of Austedo extended-release tablets, its once-a-day formulation, in May. Austedo sales missed our model estimate of $420 million as well as the Zacks Consensus Estimate of $422 million.
Ajovy recorded sales of $63 million for the quarter, down 16% year over year, due to lower volumes and unfavorable net pricing. Ajovy sales matched our model estimate but missed the Zacks Consensus Estimate of $75 million.
Copaxone posted sales of $78 million in North America, down 24% year over year, due to generic competition in the United States and a decrease in glatiramer acetate market share because of the availability of alternative therapies. Copaxone sales beat our model estimate of $58 million as well as the Zacks Consensus Estimate of $75 million.
Combined sales of Bendeka and Treanda declined 29% from the year-ago quarter to $53 million. Sales of Bendeka and Treanda were hurt by generic erosion. Teva lost orphan drug exclusivity for bendamustine products in December 2022.
Distribution revenues, generated by Anda, declined 13% year over year in the quarter to $394 million due to lower demand.
The Europe segment recorded revenues of $1.34 billion, up 19% year over year on a reported basis. Sales were up 10% on a constant currency basis. Europe revenues beat the Zacks Consensus Estimate of $1.18 billion.
Generic products revenues in Europe declined 3% in constant currency terms to $938 million, mainly due to price reductions related to generic products launched in 2022, partially offset by OTC medicines price increases. Copaxone sales declined 13% to $56 million. Ajovy's revenues increased 26% on a constant currency basis to $45 million, driven by higher volumes.
In the International Markets segment, sales rose 4% year over year to $502 million. In constant currency terms, sales increased 22% from a year ago, driven mainly by higher generic revenues.
Generic product revenues rose 24% in constant currency terms to $420 million, mainly driven by price increases, which led to higher revenues in most markets, partially offset by regulatory price reductions and generic competition in Japan. Copaxone sales jumped 34% in constant-currency terms to $7 million compared with the year-ago quarter’s figure.
The Other segment (comprising the sales of active pharmaceutical ingredients [API] to third parties and certain contract manufacturing services) recorded revenues of $246 million, down 10% year over year on a reported basis and 11% on a constant currency term.
In a separate press release, the company announced that it is looking to divest the API business, which should allow it to focus on its core business and innovation. The global API market is currently worth $85 billion.
The transaction is expected to close in the first half of 2025, subject to reaching a satisfactory agreement on transaction terms with a prospective purchaser.
Margin Discussion
Adjusted gross margin was 58.2% for the quarter, up 400 basis points (bps) year over year, mainly driven by the upfront payment from Sanofi, along with favorable product mix (higher revenue from Austedo) in the North America segment, as well as the sale of certain product rights in the Europe segment. The uptick was partially offset by the higher cost of goods sold due to inflationary and other macroeconomic pressure.
Adjusted operating margin increased 560 bps to 34.7% in the quarter due to higher gross profit margins.
Full-Year 2023 Results
Revenues in the full-year 2023 were clocked at $15.85 billion, representing a 6% year-over-year increase on a reported basis and a 7% increase on a constant currency basis compared with 2022 results. Sales beat the guided range of $15.1-$15.5 billion.
Adjusted diluted earnings per share (EPS) for the full year was $2.56, which also beat the previously guided range of $2.25-$2.55 per share.
Outlook for 2024
Rolling into 2024, Teva issued 2024 revenue guidance in the range of $15.7-$16.3 billion. The guidance range was higher than the Zacks Consensus Estimate of $15.37 billion.
Sales of Copaxone in all regions are expected to be approximately 400 million. Teva expects Ajovy and Austedo revenues of approximately $500 million and $1.5 billion, respectively.
The company expects adjusted operating income guidance in the range of $4-$4.5 billion. Teva expects adjusted EBITDA in the range of $4.5-$5 billion.
Teva expects an adjusted diluted EPS in the band of $2.20-$2.50 in 2024. The guidance range was higher than the Zacks Consensus Estimate of $2.39 per share. Adjusted tax rate is expected to be in the range of 14-17%.
Teva’s shares gained 3.2% on Jan 31, 2024, as the investors cheered the better-than-expected earnings results and promising 2024 outlook. In the past year, shares of TEVA have risen 13% compared with the industry’s growth of 22.8%.
In the past 30 days, the Zacks Consensus Estimate for Puma Biotech’s 2023 EPS has remained constant at 73 cents. During the same time frame, the consensus estimate for Puma Biotech’s 2024 EPS has remained constant at 69 cents. Over the past year, shares of PBYI have gained 7.6%.
PBYI beat estimates in three of the last four quarters while missing on one occasion, delivering a four-quarter average earnings surprise of 76.55%.
In the past 30 days, the Zacks Consensus Estimate for Kodiak’s 2023 loss per share has remained constant at $4.80. During the same period, the consensus estimate for Kodiak’s 2024 loss per share has narrowed from $3.69 to $3.68. Over the past year, shares of KOD have lost 52.7%.
KOD beat estimates in two of the trailing four quarters and missed on the other two occasions, delivering an average earnings surprise of 4.33%.
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TEVA Q4 Earnings and Revenues Surpass Estimates, Stock Up
Teva Pharmaceutical Industries Limited (TEVA - Free Report) reported fourth-quarter 2023 adjusted earnings of $1 per share, which beat the Zacks Consensus Estimate of 75 cents per share. Earnings rose 41% from 71 cents per share reported in the year-ago quarter.
Revenues for the fourth quarter came in at $4.46 billion, which beat the Zacks Consensus Estimate of $3.97 billion. Total revenues rose 15% on a reported basis and 14% on a constant currency basis. Sales growth was mainly driven by the $500 million upfront payment received in connection with the October 2023 collaboration with Sanofi (SNY - Free Report) for its anti-TL1A asset. Per the agreement, Teva and Sanofi will equally share the development costs globally.
Higher revenues from Austedo in the North America segment and generic products globally also contributed to the growth. However, the uptick in revenues was partially offset by lower sales of generic products and Anda in the North America segment and lower sales of Copaxone.
Teva Pharmaceutical Industries Ltd. Price, Consensus and EPS Surprise
Teva Pharmaceutical Industries Ltd. price-consensus-eps-surprise-chart | Teva Pharmaceutical Industries Ltd. Quote
Segment Discussion
The company reports through the following segments based on three regions — North America (comprising the United States and Canada), Europe and International markets.
North America segment sales were $2.37 billion, up 18% year over year, mainly due to the upfront payment from Sanofi and the increase in sales of newer branded drugs, Austedo and Ajovy. The uptick was partially offset by lower sales of certain legacy brands like Copaxone, Bendeka/Treanda and generic products. In the United States, sales increased 18% from the prior-year quarter to $2.27 billion.
Generic/biosimilar product revenues declined 8% from the year-ago period to $754 million in the North American segment due to increased competition for some generic products. Generic revenues missed our model estimate of $799 million as well as the Zacks Consensus Estimate of $822 million.
Huntington's disease drug, Austedo, recorded sales of $408 million in North America, up 19% year over year. Sales were mainly driven by volume growth, as prescription trends continued to increase and by the launch of Austedo extended-release tablets, its once-a-day formulation, in May. Austedo sales missed our model estimate of $420 million as well as the Zacks Consensus Estimate of $422 million.
Ajovy recorded sales of $63 million for the quarter, down 16% year over year, due to lower volumes and unfavorable net pricing. Ajovy sales matched our model estimate but missed the Zacks Consensus Estimate of $75 million.
Copaxone posted sales of $78 million in North America, down 24% year over year, due to generic competition in the United States and a decrease in glatiramer acetate market share because of the availability of alternative therapies. Copaxone sales beat our model estimate of $58 million as well as the Zacks Consensus Estimate of $75 million.
Combined sales of Bendeka and Treanda declined 29% from the year-ago quarter to $53 million. Sales of Bendeka and Treanda were hurt by generic erosion. Teva lost orphan drug exclusivity for bendamustine products in December 2022.
Distribution revenues, generated by Anda, declined 13% year over year in the quarter to $394 million due to lower demand.
The Europe segment recorded revenues of $1.34 billion, up 19% year over year on a reported basis. Sales were up 10% on a constant currency basis. Europe revenues beat the Zacks Consensus Estimate of $1.18 billion.
Generic products revenues in Europe declined 3% in constant currency terms to $938 million, mainly due to price reductions related to generic products launched in 2022, partially offset by OTC medicines price increases. Copaxone sales declined 13% to $56 million. Ajovy's revenues increased 26% on a constant currency basis to $45 million, driven by higher volumes.
In the International Markets segment, sales rose 4% year over year to $502 million. In constant currency terms, sales increased 22% from a year ago, driven mainly by higher generic revenues.
Generic product revenues rose 24% in constant currency terms to $420 million, mainly driven by price increases, which led to higher revenues in most markets, partially offset by regulatory price reductions and generic competition in Japan. Copaxone sales jumped 34% in constant-currency terms to $7 million compared with the year-ago quarter’s figure.
The Other segment (comprising the sales of active pharmaceutical ingredients [API] to third parties and certain contract manufacturing services) recorded revenues of $246 million, down 10% year over year on a reported basis and 11% on a constant currency term.
In a separate press release, the company announced that it is looking to divest the API business, which should allow it to focus on its core business and innovation. The global API market is currently worth $85 billion.
The transaction is expected to close in the first half of 2025, subject to reaching a satisfactory agreement on transaction terms with a prospective purchaser.
Margin Discussion
Adjusted gross margin was 58.2% for the quarter, up 400 basis points (bps) year over year, mainly driven by the upfront payment from Sanofi, along with favorable product mix (higher revenue from Austedo) in the North America segment, as well as the sale of certain product rights in the Europe segment. The uptick was partially offset by the higher cost of goods sold due to inflationary and other macroeconomic pressure.
Adjusted operating margin increased 560 bps to 34.7% in the quarter due to higher gross profit margins.
Full-Year 2023 Results
Revenues in the full-year 2023 were clocked at $15.85 billion, representing a 6% year-over-year increase on a reported basis and a 7% increase on a constant currency basis compared with 2022 results. Sales beat the guided range of $15.1-$15.5 billion.
Adjusted diluted earnings per share (EPS) for the full year was $2.56, which also beat the previously guided range of $2.25-$2.55 per share.
Outlook for 2024
Rolling into 2024, Teva issued 2024 revenue guidance in the range of $15.7-$16.3 billion. The guidance range was higher than the Zacks Consensus Estimate of $15.37 billion.
Sales of Copaxone in all regions are expected to be approximately 400 million. Teva expects Ajovy and Austedo revenues of approximately $500 million and $1.5 billion, respectively.
The company expects adjusted operating income guidance in the range of $4-$4.5 billion. Teva expects adjusted EBITDA in the range of $4.5-$5 billion.
Teva expects an adjusted diluted EPS in the band of $2.20-$2.50 in 2024. The guidance range was higher than the Zacks Consensus Estimate of $2.39 per share. Adjusted tax rate is expected to be in the range of 14-17%.
Teva’s shares gained 3.2% on Jan 31, 2024, as the investors cheered the better-than-expected earnings results and promising 2024 outlook. In the past year, shares of TEVA have risen 13% compared with the industry’s growth of 22.8%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Teva currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the drug/biotech industry are Puma Biotechnology, Inc. (PBYI - Free Report) and Kodiak Sciences (KOD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, the Zacks Consensus Estimate for Puma Biotech’s 2023 EPS has remained constant at 73 cents. During the same time frame, the consensus estimate for Puma Biotech’s 2024 EPS has remained constant at 69 cents. Over the past year, shares of PBYI have gained 7.6%.
PBYI beat estimates in three of the last four quarters while missing on one occasion, delivering a four-quarter average earnings surprise of 76.55%.
In the past 30 days, the Zacks Consensus Estimate for Kodiak’s 2023 loss per share has remained constant at $4.80. During the same period, the consensus estimate for Kodiak’s 2024 loss per share has narrowed from $3.69 to $3.68. Over the past year, shares of KOD have lost 52.7%.
KOD beat estimates in two of the trailing four quarters and missed on the other two occasions, delivering an average earnings surprise of 4.33%.