Teva Pharma Shares Surge on Proposed Opioid Settlement, Earnings Beat
2022.07.27 20:26
Teva Pharma (TEVA) Shares Surge on Proposed Opioid Settlement, Earnings Beat
Shares of Teva Pharma (TEVA) jumped over 24% in early Wednesday trading following the announcement of its second-quarter results and an agreement, in principle, on a nationwide opioid settlement.
The company beat earnings and revenue forecasts, posting a profit of $0.68 per share on revenue of $3.79 billion. Analysts expected earnings per share of $0.56 on revenue of $3.78 billion.
However, it is the company’s opioid settlement announcement that has caught the attention of analysts.
BofA analyst Jason Gerberry, who has a Neutral rating and a $10 per share price target on the stock, said the deal adds “much-needed certainty.”
“The opioid agreement looks positive with the NW-deal costing TEVA $3bn in cash (vs. our presumed $5.4bn), of which $650m has already been paid through prior settlements,” said Gerberry. “On tomorrow’s call, we will look for additional details regarding extent of current participation rates and financial implications of Allergan (NYSE:AGN) “indemnification obligations.” Per the PR, TEVA’s deal does not include a settlement with New York state but the parties are in ongoing settlement negotiations and TEVA’s payout amount is adjustable depending on plaintiff participation. Even if a few one-off deal are separately required, we believe a deal encompassing 90% of litigants (same as JNJ) leaves TEVA with cushion to consummate a full resolution within prior communicated parameters.”
Meanwhile, Raymond James analyst Elliot Wilbur, who has a Market Perform rating on Teva, explained that the long-running opioid litigation saga had “relegated shares to the realm of the uninvestable for the better part of three years.”
“It took longer and was ultimately more costly than expected but outside a few clean-up items, the global settlement appears for all intents and purposes to represent the final chapter of these Opioid wars enabling investors to direct their attention to fundamentals without constantly having to chase down every new opioid litigation headline,” added Wilbur.
In its earnings report, Teva said it sees fiscal 2022 earnings per share between $2.40 and $2.60 with revenue between $15 billion and 15.6 billion.
By Sam Boughedda
