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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Robohogs who wrote (5165)	5/12/2011 1:56:40 AM
From: Robohogs	of 5205

In Teva's Q1 results, US Copaxone accounted for US$624 million of revenues. Assuming about a 70-80% gross margin means that this product accounts for about US$2.5 billion (annualized) X 70% (let's be conservative) = US$1.75 billion of gross margin. At 80%, we are talking US$2 billion. As this is the main non-generic product of Teva, there is probably quite a bit of promotional activity directly related to it. So overall operating profit might be as low as US$1.1 billion or so (just under 50% EBIT margin) but could be as high as US$1.6-1.7 billion. This compares to just over US$5-5.5 billion of Non-GAAP EBIT forecast for this year. If half of that went away, we are talking a 15-16% drop in EBIT at the high end, and 10% at the low end. I will go through some research reports and come back if I see anything. I just saw in a Collins Stewart report that the analyst there said target with Copaxone was US$65 and without Copaxone (don't know if this removes 100% or only half of US Copaxone sales), the target is US$51. So roughly 20% of value. Similar to above if analyst is discussing removing half only and similar to 100% removal if based on revenues (as Copaxone is about 20% of revenues). Jon Jon

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