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Teva (TEVA): Stock Likely to Beat on Earnings in Q2 Again?
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Teva Pharmaceutical Industries Limited (TEVA - Free Report) is scheduled to report its second-quarter 2016 earnings results on Aug 4, before the opening bell. Teva’s first quarter earnings surpassed expectations. Let’s see how things are shaping up for this announcement.
Factors at Play
Last month, Teva had provided its long term outlook and had also raised its earnings outlook for the second quarter to $1.19 – $1.22 per share from the earlier guidance of $1.16 – $1.20 per share. Meanwhile, second quarter revenues are expected in the range of $4.9 – $5.0 billion, up from the previous guidance of $4.8 – $4.9 billion.
Teva’s generic segment could continue seeing some weakness as in the first quarter when generic segment revenues declined 17%. Revenues from the U.S. generics business had declined 32% reflecting loss of exclusivity for the generic versions of Nexium and Pulmicort. Lack of any important generic launches during the second quarter will also impact the performance of this segment.
As far as pricing erosion in the generics segment is concerned, Teva said that it did not see any change with the environment remaining stable.
The EU generics segment will remain under pressure with sales being affected by macro-economic conditions and healthcare reforms.
However, Teva’s position in the generics market should strengthen with the completion of the acquisition of Allergan plc’s generics segment -- Actavis Generics. The company received U.S. Federal Trade Commission (FTC) approval for the acquisition with the deal slated to close this week.
Once the deal goes through, Teva will have about 338 product registrations pending FDA approval and will hold the leading position in first-to-file opportunities with about 115 pending ANDAs in the U.S. Moreover, the company will have a commercial presence across 80 markets, including a top-three leadership position in over 40 markets.
Teva expects to achieve $1.4 billion in operational and tax synergies by the end of 2019 through this deal which is expected to boost 2017 EPS by about 17% and 2019 EPS by 19%.
Meanwhile, in the branded segment, Teva mentioned a slight sequential improvement in its specialty products – Copaxone, Azilect, as well as Nuvigil.
Investors will remain focused on the Copaxone franchise’s performance considering the 20 mg version of the multiple sclerosis treatment is facing generic competition in the form of Glatopa. Teva has guided towards Copaxone sales of about $4 billion in 2016 and an erosion of between $200 million - $300 million every year from this level until 2019. Investors will also be interested in the performance of recently launched products like Bendeka and Cinqair.
Teva continues to focus on its cost reduction program. Results should also benefit from lower financing costs for the Actavis Generics deal.
Surprise History
Teva’s performance has been strong with the company reporting positive earnings surprises in three of the last four quarters. The average earnings surprise over the last four quarters is a positive 4.56%.
Our proven model shows that Teva is likely to beat earnings this quarter because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.56%. The Most Accurate estimate is $1.20 per share while the Zacks Consensus Estimate for Teva is $1.17 per share.
Zacks Rank #3 (Hold): The combination of Zacks Rank #3 and earnings ESP of +2.56% makes us very confident in looking for a positive earnings beat on Aug 4.
Stocks That Warrant a Look
The Earnings ESP for Raptor Pharmaceuticals Corp. is +11.11% and it carries a Zacks Rank #3. The company will be reporting second-quarter results on Aug 4.
Bio-Techne Corp. (TECH - Free Report) has an Earnings ESP of +1.14% and carries a Zacks Rank #3. It is expected to report fourth-quarter fiscal 2016 results on Aug 4.
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Teva (TEVA): Stock Likely to Beat on Earnings in Q2 Again?
Teva Pharmaceutical Industries Limited (TEVA - Free Report) is scheduled to report its second-quarter 2016 earnings results on Aug 4, before the opening bell. Teva’s first quarter earnings surpassed expectations. Let’s see how things are shaping up for this announcement.
Factors at Play
Last month, Teva had provided its long term outlook and had also raised its earnings outlook for the second quarter to $1.19 – $1.22 per share from the earlier guidance of $1.16 – $1.20 per share. Meanwhile, second quarter revenues are expected in the range of $4.9 – $5.0 billion, up from the previous guidance of $4.8 – $4.9 billion.
Teva’s generic segment could continue seeing some weakness as in the first quarter when generic segment revenues declined 17%. Revenues from the U.S. generics business had declined 32% reflecting loss of exclusivity for the generic versions of Nexium and Pulmicort. Lack of any important generic launches during the second quarter will also impact the performance of this segment.
As far as pricing erosion in the generics segment is concerned, Teva said that it did not see any change with the environment remaining stable.
The EU generics segment will remain under pressure with sales being affected by macro-economic conditions and healthcare reforms.
However, Teva’s position in the generics market should strengthen with the completion of the acquisition of Allergan plc’s generics segment -- Actavis Generics. The company received U.S. Federal Trade Commission (FTC) approval for the acquisition with the deal slated to close this week.
Once the deal goes through, Teva will have about 338 product registrations pending FDA approval and will hold the leading position in first-to-file opportunities with about 115 pending ANDAs in the U.S. Moreover, the company will have a commercial presence across 80 markets, including a top-three leadership position in over 40 markets.
Teva expects to achieve $1.4 billion in operational and tax synergies by the end of 2019 through this deal which is expected to boost 2017 EPS by about 17% and 2019 EPS by 19%.
Meanwhile, in the branded segment, Teva mentioned a slight sequential improvement in its specialty products – Copaxone, Azilect, as well as Nuvigil.
Investors will remain focused on the Copaxone franchise’s performance considering the 20 mg version of the multiple sclerosis treatment is facing generic competition in the form of Glatopa. Teva has guided towards Copaxone sales of about $4 billion in 2016 and an erosion of between $200 million - $300 million every year from this level until 2019. Investors will also be interested in the performance of recently launched products like Bendeka and Cinqair.
Teva continues to focus on its cost reduction program. Results should also benefit from lower financing costs for the Actavis Generics deal.
Surprise History
Teva’s performance has been strong with the company reporting positive earnings surprises in three of the last four quarters. The average earnings surprise over the last four quarters is a positive 4.56%.
TEVA PHARM ADR Price and EPS Surprise
TEVA PHARM ADR Price and EPS Surprise | TEVA PHARM ADR Quote
Earnings Whispers?
Our proven model shows that Teva is likely to beat earnings this quarter because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.56%. The Most Accurate estimate is $1.20 per share while the Zacks Consensus Estimate for Teva is $1.17 per share.
Zacks Rank #3 (Hold): The combination of Zacks Rank #3 and earnings ESP of +2.56% makes us very confident in looking for a positive earnings beat on Aug 4.
Stocks That Warrant a Look
The Earnings ESP for Raptor Pharmaceuticals Corp. is +11.11% and it carries a Zacks Rank #3. The company will be reporting second-quarter results on Aug 4.
Bio-Techne Corp. (TECH - Free Report) has an Earnings ESP of +1.14% and carries a Zacks Rank #3. It is expected to report fourth-quarter fiscal 2016 results on Aug 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>