For the second time in three weeks: Credit Suisse lowered Teva’s target price against legal risks
The bank is now setting a target price of $ 14 per share, compared to $ 18 earlier, and compared to $ 20, which was the target price of three weeks ago. • The lowering of Credit Suisse’s target price is explained by the “double legal risk” that increases the pressure – In the United States, and claims for opioid analgesics
For the second time in just three weeks, Credit Suisse is lowering its target price for Teva. The bank is now setting a target price of $ 14 per share, compared to $ 18 earlier, and $ 20, which was the target price of three weeks ago. Credit Suisse’s recommendation for the Teva share remained unchanged, “neutral”. The target price is also higher than the current price of Teva by about 21%, after the Teva share returned to declines yesterday and lost 2.7% to the current price of 11.54 dollars, reflecting the drug company market value of 12.6 billion dollars.
Lowering the target price of Credit Suisse is explained by the “double legal risk” that is increasing the pressure – both the demand for pricing in US generic drugs and claims for opioid painkillers, In recent weeks, the company has lost $ 3 billion from its market value since May 10, and $ 8 billion since the beginning of February (by the way, in February, Credit Suisse’s target price for Teva was $ 26). Therefore, potential costs to nature are difficult to predict, despite our conversations with the company and legal advisors “We leave the neutral recommendation on the stock until we have better visibility on both of these issues, as well as better evidence of how Teva will return to growth,” the analyst wrote.
The new target price of $ 14 is derived from an EV / EBITDA multiplier of 10 according to Credit Suisse’s forecast for the results of 2019. According to Diwan, lowering the target price is intended to reflect increased uncertainty and legal risks, although in his opinion the share price already embodies a significant portion of the risk.
Diwan believes there may be compromises in the two proceedings. Legal experts who dealt with similar issues in the past with whom the analyst consulted had estimated that a compromise in the generic price-fixing claim would range from hundreds of millions of dollars to $ 1 billion, rather than many billions of dollars, as plaintiffs wanted; But Teva may bear a disproportionate share of the amount because prosecutors claim it led the conspiracy.
In their assessment, the first lawsuit in Oklahoma, which will begin in the next few days, will provide a framework for other claims and shed light on the potential damage to nature (as well as Johnson & amp; amp; Co.) Johnson).