The disastrous year for Teva Pharmaceutical shareholders will improve in 2018, according to one top Wall Street firm.
Goldman Sachs raised its rating to buy from neutral for the generic drugmaker, citing the company’s aggressive cost-cutting targets for the next two years.
The call sent the stock up 4 percent during Friday’s premarket session.
“TEVA has turned a corner on December 14, with its announced $3bn of cost cuts by 2019 coming in well ahead of our expectation of $1-2bn by 2020,” analyst Jami Rubin wrote in a note to clients Friday. “While we acknowledge there is skepticism on the path forward … we believe we are in the early innings of a credible turnaround led by a competent management team.”
The company announced Thursday it plans to lay off 14,000 employees or 25 percent of its workforce as a part of its restructuring plan over the next two years.
The analyst increased her 12-month price target for Teva shares to $20 from $15, representing 16 percent upside to Thursday’s close. Teva shares surged 10 percent on Thursday after announcing the cost-saving targets and layoffs.
Teva shares are underperforming the market this year. Through Thursday, its stock is down 52 percent in 2017 versus the S&P 500’s 18.5 percent return. The company repeatedly disappointed Wall Street with lower-than-expected financial guidance and weak results earlier this year.
Rubin expressed confidence Teva’s new CEO, Kare Schultz, who joined in November, will deliver on the cost-cutting projections. The executive has “repeatedly understated and over-delivered” at his previous job at Lundbeck, Rubin said.
Source: CNBC
