Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Teva Pharmaceuticals


Published on

Equity Research Presentation on Teva Pharmaceuticals by CJ Wei

Published in: Business, Economy & Finance
  • Be the first to comment

Teva Pharmaceuticals

  1. 1. CJ Wei 4/19/2011 Recommend: BUY Target Price: $58.60<br />TevaPharmacare Industries<br />
  2. 2. Key Stats and Pricing<br />Teva’s current price provides an attractive entry opportunity<br />
  3. 3. Presentation Overview<br />
  4. 4. Recommendation <br />Teva Pharmaceutical is a strong long-term investment with an attractive current price<br />
  5. 5. Investment Thesis<br />Why do I like Teva Pharmaceuticals?<br /><ul><li>Leading position in pharmaceutical industry, strategically positioned in attractive markets
  6. 6. Attractive growth prospects, yields, unique value
  7. 7. Low risk, defense stock
  8. 8. Hybrid of generic and innovative pharmaceutical products allow stable cash flows
  9. 9. Compliments our overweight healthcare perspective and diversification strategy</li></li></ul><li>Teva Pharmaceuticals<br />Teva Pharmaceutical’s product offerings are divided into three categories<br /><ul><li>Generic animal pharmaceuticals
  10. 10. Market proprietary dermatological and nutraceutical veterinary products in the US
  11. 11. Copaxone
  12. 12. Azilect
  13. 13. Speciality Respiratory Products
  14. 14. Women’s Health
  15. 15. Biopharmaceuticals and Biosimilars
  16. 16. Sold at prices below originator pharmaceuticals
  17. 17. Global reach: North America, Europe, International Markets</li></li></ul><li>Generic Drug Industry<br />Key drivers that contribute to a positive revenue outlook<br />Expiring Patents<br />Growing Middle Class<br />Positive Revenue Outlook<br />Aging Population<br />Emerging Market Growth<br />
  18. 18. Investment Thesis I:Global Muscle and Reach<br />Teva’s global operations positions the company to capture generic pharmaceutical growth<br />
  19. 19. Investment Thesis II:Growth, Yield, Value<br />Growth potential shown by recent acquisitions and product launches<br />Strategic Expansion Strategy<br /><ul><li>Barr Pharma in 2008 Recent acquisition of Ratiopharm, LaboratoireTheramex, CorporacionInfarmasa
  20. 20. P&G Joint Venture
  21. 21. Strong cash position</li></ul>Launches in the U.S. of five significant new generic products<br />
  22. 22. Investment Thesis II:Growth, Yield, Value<br />Health care reform should increase the demand for cheaper drugs<br />
  23. 23. Investment Thesis II:Growth, Yield, Value<br />Generous dividend payments<br />Dividend yield of 1.77%, growing at an 25% annual clip<br />15 dividend increases in the last 5 years<br />
  24. 24. Investment Thesis II:Growth, Yield, Value<br />Nearing lower end of 52-week trading range<br />Currently trading at 11.9 times current year earnings<br />Discount of 15.2 times earning level that <br />52-week trading range: 46.99 - 62.82<br />
  25. 25. Investment Thesis III:Low Risk Investment<br />Low risk going into summer months<br /><ul><li>Managed well financially
  26. 26. Low leverage
  27. 27. Strong and diverse pipeline
  28. 28. Health care stability due to inelastic demand</li></li></ul><li>Case Study 1: September 2000 through April 2002 <br />Teva demonstrates price stability in turmoil<br />September 2000 to April 2002<br />Teva stock declined in price only about 26%<br />NASDAQ declined 67%<br />
  29. 29. Case Study 2: February through October 2008<br />Teva demonstrates price stability in turmoil<br />February through October 2008<br />Teva stock declined in price only about 22%<br />NASDAQ declined 47%<br />
  30. 30. Investment Thesis IV:MSF + Reynolds Strategy<br />Health care reform should increase the demand for cheaper drugs<br /><ul><li>Neither funds have positions in a brand or generic pharmaceutical
  31. 31. Low volatility in uncertain summer months
  32. 32. Healthcare unintentionally underweight </li></li></ul><li>Additional Company Info<br />
  33. 33. Management<br />Superior Management team that aims to maximize value for shareholders <br />“Thanks to the expertise of our integration teams, we will be able to hit the ground running terms of maximizing our new scale and seizing the opportunities for further growth that our leadership position brings us.”<br />CEO ShlomoYanai<br />
  34. 34. Competitors Analysis<br />Superior Management team that aims to maximize value for shareholders <br />TevaPharma (TEVA)<br />Watson Pharma (WPI)<br />MylanInc (MYL)<br />ROA: 9.43%<br />ROE: 16.28%<br />Prof. Marg: 8.75%<br />Op. Marg: 23.38% <br />ROA: 3.13%<br />ROE: 5.85%<br />Net Prof. Marg: 5.14%<br />Op. Marg: 8.55% <br />ROA: 3.09%<br />ROE: 6.64%<br />Net Prof. Marg: 6.34%<br />Op. Marg: 13.34% <br />
  35. 35. Key Financials<br />Revenue and positive key financials over industry<br />From 2009 to 2010, Teva increased sales 16%, earnings per share 35%, and cash 23%<br />On pace to nearly double sales by 2015<br />
  36. 36. Valuation<br />DCF Analysis<br />Target Price: $58.6<br />WACC: 12%<br />Terminal Growth: 2%<br />TVM of FCF: 10x<br />Catalyst<br />Recent company acquisitions<br />Generic pharmaceutical growth<br />Slowed revenue growth due to competition<br />Time Horizon <br />Approximately 1 Year<br />
  37. 37. Investment Management Professionals<br />Currently held by many hedge fund managers including Paulson, Soros, Buffet<br />
  38. 38. Risks<br />Health care reform should increase the demand for cheaper drugs<br /><ul><li>Success depends on Teva’s ability to commercialize additional pharmaceutical products
  39. 39. Revenue and profits decline easily in generic drug arena
  40. 40. Sales of branded products such as Copaxone could be adversely affected when patent expires
  41. 41. Acquisitions diverse risks</li></li></ul><li>Summary<br />BUY recommendation at market price<br /><ul><li>The constant demand for pharmaceutical products should provide a safe investment for summer months:
  42. 42. Dominant player in pharmaceutical industry
  43. 43. Growth, value, yield
  44. 44. Compliments MSF and Reynolds healthcare strategy</li>