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Author: putnid Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19767  
Subject: Re: The new TEVA Date: 11/30/2012 1:01 PM
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I found the Market's response to TEVA's lowered guidance interesting. Here's an article that provides food for thought:

http://tinyurl.com/cea9wqm

TEVA: Lower Expectations Out Of The Way, Stock Should Climb Into Investor Day

Individual's on PropThink's editorial team have been following Israeli-based TEVA for more than a decade, and notably, this is the first down-earnings year that we've seen, a sign of the times for this leading global generic drug company. As the blockbuster drug patent expiration cycle comes to an end after >10 years of great times for the generic industry, TEVA is in need of a new strategy.

We believe TEVA released the new guidance ahead of its Analyst/Investor Day (December 11th in NYC) in order to get the "bad news" of the financial guidance out of the way, so that the event can be focused squarely on the new strategy, led by Dr. Levin and his new team.

Trading at less than 8x forward earnings, the new TEVA investment thesis reminds us of big pharma stories like Pfizer (PFE) and Abbot (ABT), whereby "sum-of-the-parts" valuations, big cash flows, and big dividends drove major upside in stocks of businesses that have matured.

A major shift in strategy is usually a bad sign for a company, and for the long run, we still need to be convinced about who TEVA really will become. Meanwhile, low P/E, cash flow, dividend, and break up stories for big mature companies have worked very well over the last couple of years in the pharma sector, and we believe the large pools of institutional investor money will flock to TEVA in the near- and medium-term.


I've been long TEVA for a good long while. I can't say I've profited much, to date, but I see considerable value in the company and continue to believe that this major generic drug manufacturer will fare well as global demand for affordable drugs continues to grow.
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