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Teva (TEVA) Provides 2016-2019 Outlook, Shares Gain

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Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) , which had raised its second quarter revenue and earnings guidance, held a call to discuss its preliminary outlook for 2016-2019 including the impact of the upcoming Actavis Generics acquisition.

The company, which will be reporting second quarter results on Aug 4, raised its earnings outlook for the 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. Both the new earnings and revenue outlooks are above the Zacks Consensus Estimate of $1.16 per share and $4.81 billion, respectively.

Provides 2016-2019 Outlook

The company’s 2016 outlook includes five months contribution from Actavis Generic. 2016 earnings are expected in the range of $5.20 - $5.40 per share on revenues of $22 billion - $22.5 billion.

Teva expects revenues to grow from $19.7 billion in 2015 to $26.7 - $27.8 billion in 2019 while earnings per share (EPS) are expected to grow from $5.42 in 2015 to $6.90 - $7.40 in 2019. Teva expects to achieve cost synergies and tax savings of approximately $1.4 billion annually by the end of 2019.

2017 and 2018 EPS are expected in the range of $6.00 - $6.50 and $6.30-$6.90, respectively on revenues of $25.2-$26.2 billion and $25.8-$26.9 billion, respectively.

Teva said that it does not expect generic competition for Copaxone 40 mg. Copaxone sales are expected to be about $4 billion in 2016 with an erosion of $200 million - $300 million expected every year until 2019.

TEVA PHARM ADR Price and Consensus

TEVA PHARM ADR Price and Consensus | TEVA PHARM ADR Quote

Actavis Generics Acquisition to Close Anytime Now

Although Allergan plc (AGN - Free Report) has extended the deal closing date by three months to Oct 26, 2016, Teva’s CEO said that he expects the Actavis Generics acquisition to close any time now with only FTC approval pending.  

Teva now expects the total net cost of the deal to be $35.1 billion instead of $40.1 billion.

Investors should be cheered by the upcoming closing of the Actavis Generics deal which was announced a year back. Moreover, with Teva’s guidance exceeding current expectations for 2016 and 2017, we expect upward revisions in earnings estimates. Shares were up 3.8%.

Meanwhile, investors looking for well-ranked stocks with a presence in the generics segment can consider Mylan N.V. (MYL - Free Report) and Dr. Reddy's Laboratories Ltd. (RDY - Free Report) . Both carry a Zacks Rank #2 (Buy).

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