I want to get some feedback Teva Pharmaceuticals. I know they've had issues with debt from an acquisition and ongoing settlements related to kickbacks but they seem like they're in a good position to breakout.
Here's a bit I wrote on a finance and business blog I've started:
With a market cap of $9.9 billion and an enterprise value (EV) of $33.5 billion, Teva’s EV is nearly 3.4x its market cap. Although EV does account for a company’s debt, there has been a trend to with Teva to reduce its proportion of debt on its balance sheet. Prior debt burdens, both from a $2.4 billion multi-currency bond issuance and a $5 billion loan, for the purposes of the acquisition of Actavis Generics in 2016 had led to years of declining share price. Teva has a current ratio of 1.01, a quick ratio of 0.58, and are showing a positive trend of income growth. It would seem the low quick ratio is also not of much concern. Additionally, Teva’s total-assets-to-total-debt ratio is 1.3, showing they can cover all their debts.
Reviewing their most recent 10-Q as of June 30, 2021, Teva states an earnings per share attributable to ordinary shareholders of $0.19, indicating the P/E Ratio may be about 47.11. This is rather high but, with a forward P/E of around 3.5, it looks likely that the high P/E Ratio may be temporary.
In their Second Quarter 2021 presentation, Teva shows a steady ongoing debt reduction. Coupled with this ongoing debt reduction, they have increased the Research and Development spending by 10.2% from Q2 2020 to Q2 2021, indicating a focus on future products. Teva has also shifted to spending more on sales and marketing while reducing general and administrative spending.
At close on September 28, 2021, Teva’s share price sat at $9.60. Given the condition of their balance sheet and positive trending income statements, this price is low. Recent analyses from both Argus and CFRA pin Teva’s target price to $10 per share while Morningstar has a rosier projection of $20. I think it would be a safe bet that Teva hits a share price in the middle of those in the $15-$17 range. |
