* Reports Q1 2019 results on Thursday, May 2, before the market is open
* Revenue forecast: $ 4.38 billion
* EPS Expected: $ 0.58
Teva Pharmaceuticals & # 39; (NYSE 🙂 turnaround was a heavy sale for its Chief Executive Officer, Kare Schultz, at least in 2019.
The share price of & # 39; the world's largest producer of generic drugs has fallen by more than 40% from the highest peak of 52 weeks in August, amid concerns that the worst for the company's growth is not over yet. Stock trading was trading at $ 15.22 per share in yesterday's closing, after 2.5% dropped during the session.
Analyst forecast for the investor community still remains questionable about the company's transition to stability. During tomorrow's release, Israeli-based Teva is likely to report that earnings have fallen to $ 0.58 per share from $ 0.94 per share from the same period last year, while sales are 13.5% to 4.38 billion dollar shrinked, according to the analysts' average estimate
Teva tries to recover from a slump, started in the summer of 2015, which tumbled its shares when the company invested heavily to grow its copycat drug business. That happened at a time when the margins in the United States began to shrink in the midst of fierce competition from other pharmaceutical producers. The biggest setback came when Teva lost its monopoly over Copaxone, a blockbuster multiple sclerosis injection that at one point generated half of Teva & # 39; s profit.
However, those negative prospects will soon change if Schultz can demonstrate that its efforts to cut costs are working and the company has managed to control the fall in sales. We believe the outcome this year is unlikely, given the company's earlier warnings that growth will not return again next year and that 2019 will remain a "difficult" year.
Teva is playing a compelling value
But in our opinion, Teva offers an attractive opportunity if your investment horizon is in the long term and you feel comfortable staying invested in the coming years. One of the main reasons to make us bullish with these stock reports is the measurable success of the CEO in reducing Teva's costs and the huge amount of debt.
Against a very difficult operational environment, Schultz managed to cut costs by $ 2.2 billion last year and will close or sell another 11 production units in 2019, bringing the total to about 60 locations. to bring
Teva is also on track to meet its $ 3 billion overall target of savings by the end of 2019 and can close more plants later, Schultz said in February. As a result of these measures, the company's debt has fallen to $ 29 billion from the 2016 high of $ 36 billion.
Teva & # 39; s robust pipeline of new drugs is another bright spot in the company's cover plan. The recent approval of the next generation of migraine medication Ajovy has not created much excitement so far, but this drug has a great future and could generate a significant new revenue stream in the next two to three years.
More than 36 million people suffer from these debilitating episodes and the drug could generate around $ 500 million in revenue by 2022, according to analysts' estimates. Teva & # 39; s medicine for Huntington's Disease could also be another major revenue generator, helping the medicine man to put the slide in his sales. Austedo's peak sales are expected to rise to $ 1.3 billion over the next three years.
Bottom Line
Despite the setback of 2019, we continue to see the improvement in Teva's financial position and investor perception, as the company successfully implements its three-year turnaround plan and the generic drug market in the United States shows signs of stability. Schultz belt tightening, an impressive new drug pipeline and the support of major investors, including Berkshire Hathaway Inc. (NYSE 🙂 and Capital Group Companies of Warren Buffett, make Teva a good career for long-term investors.
