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Teva (TEVA) to Report Q3 Earnings: What's in the Cards?
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Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) will report third-quarter 2018 earnings on Nov 1, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 16.42%.
This generic drugmaker’s shares have risen 4% this year so far against the industry’s decline of 5.8%.
Teva’s earnings surpassed expectations in three of the last four quarters, resulting in an average positive surprise of 16.18%.
Teva Pharmaceutical Industries Ltd. Price and EPS Surprise
Let’s see how things are shaping up for this announcement.
Factors to Consider
As announced in November last year, Teva no longer reports two separate global groups for its two businesses — generics and specialty medicines. Instead, it reports under new segments based on three regions — North America (United States and Canada), Europe and International Markets (previously named “Growth Markets” segment).
Pricing erosion in U.S. generics market, lower sales of key multiple sclerosis drug, Copaxone and divestiture of some non-core assets in the Women’s Health business are expected to hurt North America segment sales in the third quarter. On the second quarter call, management had said that Copaxone sales will decline more sharply in the second half due to additional pricing pressure and expected uptake of the second generic version of the 40 mg formulation. Accordingly, Copaxone sales are expected to decline sharply in the third quarter.
Meanwhile, additional competition for Teva’s largest product, Concerta authorized generic, also hurt sales in the quarter.
Importantly, sales of all other branded products Bendeka, Treanda, ProAir and Qvar declined in the second quarter. It remains to be seen if sales trends improve in the third quarter.
Meanwhile, in Europe as well as International Markets segments, loss of revenues from the divestiture of the women’s health business and discontinued business activities are likely to hurt sales. The decline in sales of generic medicines and Copaxone is expected to continue, which can offset the positive impact of generic launches.
Importantly, on the call, investors will be keen to know Teva’s launch plans for its newly approved anti-calcitonin gene-related peptide (“CGRP”) drug, Ajovy (fremanezumab) injection, as a preventive treatment of migraine. Investors will also be interested to know how management plans to capture market share for Ajovy against Amgen and Lilly’s (LLY - Free Report) CGRPs, which were also approved this year.
Cost savings from Teva’s aggressive restructuring initiatives announced last year are likely to provide some support to the bottom line. Teva has a new organizational structure in place, is closing plants, cutting down its generics portfolio, divesting non-core assets, eliminating low-value R&D projects, and is significantly cutting its global workforce. Teva expects to save almost $3 billion by the end of 2019 from these initiatives. An update is expected on the re-structuring plan on the third-quarter call.
Earnings Whispers
Our proven model does not conclusively show that Teva is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Earnings ESP: Its Earnings ESP is -0.27%. The Zacks Consensus Estimate is pegged at 55 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Teva’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat
We caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some large biotech/drug stocks worth considering per our model. These have the right combination of elements to beat on earnings this time around:
Allergan, plc has an Earnings ESP of +3.38% and a Zacks Rank of 3. The company is scheduled to report third-quarter earnings on Oct 30.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Teva (TEVA) to Report Q3 Earnings: What's in the Cards?
Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) will report third-quarter 2018 earnings on Nov 1, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 16.42%.
This generic drugmaker’s shares have risen 4% this year so far against the industry’s decline of 5.8%.
Teva’s earnings surpassed expectations in three of the last four quarters, resulting in an average positive surprise of 16.18%.
Teva Pharmaceutical Industries Ltd. Price and EPS Surprise
Teva Pharmaceutical Industries Ltd. Price and EPS Surprise | Teva Pharmaceutical Industries Ltd. Quote
Let’s see how things are shaping up for this announcement.
Factors to Consider
As announced in November last year, Teva no longer reports two separate global groups for its two businesses — generics and specialty medicines. Instead, it reports under new segments based on three regions — North America (United States and Canada), Europe and International Markets (previously named “Growth Markets” segment).
Pricing erosion in U.S. generics market, lower sales of key multiple sclerosis drug, Copaxone and divestiture of some non-core assets in the Women’s Health business are expected to hurt North America segment sales in the third quarter. On the second quarter call, management had said that Copaxone sales will decline more sharply in the second half due to additional pricing pressure and expected uptake of the second generic version of the 40 mg formulation. Accordingly, Copaxone sales are expected to decline sharply in the third quarter.
Meanwhile, additional competition for Teva’s largest product, Concerta authorized generic, also hurt sales in the quarter.
Importantly, sales of all other branded products Bendeka, Treanda, ProAir and Qvar declined in the second quarter. It remains to be seen if sales trends improve in the third quarter.
Meanwhile, in Europe as well as International Markets segments, loss of revenues from the divestiture of the women’s health business and discontinued business activities are likely to hurt sales. The decline in sales of generic medicines and Copaxone is expected to continue, which can offset the positive impact of generic launches.
Importantly, on the call, investors will be keen to know Teva’s launch plans for its newly approved anti-calcitonin gene-related peptide (“CGRP”) drug, Ajovy (fremanezumab) injection, as a preventive treatment of migraine. Investors will also be interested to know how management plans to capture market share for Ajovy against Amgen and Lilly’s (LLY - Free Report) CGRPs, which were also approved this year.
Cost savings from Teva’s aggressive restructuring initiatives announced last year are likely to provide some support to the bottom line. Teva has a new organizational structure in place, is closing plants, cutting down its generics portfolio, divesting non-core assets, eliminating low-value R&D projects, and is significantly cutting its global workforce. Teva expects to save almost $3 billion by the end of 2019 from these initiatives. An update is expected on the re-structuring plan on the third-quarter call.
Earnings Whispers
Our proven model does not conclusively show that Teva is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Earnings ESP: Its Earnings ESP is -0.27%. The Zacks Consensus Estimate is pegged at 55 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Teva’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat
We caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some large biotech/drug stocks worth considering per our model. These have the right combination of elements to beat on earnings this time around:
Amgen, Inc. (AMGN - Free Report) is slated to announce financial figures on Oct 30. The company has an Earnings ESP of +3.54% and is a Zacks #2 Ranked stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allergan, plc has an Earnings ESP of +3.38% and a Zacks Rank of 3. The company is scheduled to report third-quarter earnings on Oct 30.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>