Analyst Note| Damien Conover, CFA |
Teva Pharmaceutical’s first-quarter results were largely in line with our forecasts, and we therefore maintain our $20 fair value estimate and no-moat rating. First-quarter revenue and adjusted EPS were $3.98 billion and $0.63, slightly below expectations but not material enough to change our valuation. In the Europe and international segments, generics sales fell by double digits compared with last year’s unexpectedly high results. Most specialty products followed suit with flat or declining sales. In contrast, generics sales in North America rose year over year as last year’s stockpiling effect in North America was less pronounced than in other regions. The North America segment also saw Copaxone (for multiple sclerosis) sales continue to erode while Austedo (for Huntington’s disease) maintained its strong yearly growth. Over the next few quarters, Teva will resume its full marketing spending. Consequently, we expect strong market share growth of Austedo and Ajovy (for migraines) over the coming years. Management has succeeded in reducing net debt by $500 million this quarter to $23.3 billion and reaffirmed last quarter’s revenue and EPS guidance for 2021.