Analyst Eats 'Some Humble Pie,' Says Teva Needs To Deliver On Greater Visibility In Coming Months

Analysts at Deutsche Bank see a scenario in which Teva Pharmaceutical Industries Ltd (ADR) TEVA's stock can move higher from its current levels but are simultaneously no longer recommending investors be buying the stock.

The firm's Gregg Gilbert downgraded Teva's stock from Buy to Hold with a price target slashed from $22 to $14.

A $14 price does imply a "meaningful return opportunity" for investors, but the Israel-based company still needs to tackle various uncertainties, the analyst wrote. For example, Teva's capital structure remains a concern, the core generic business is facing an erosion especially in Copaxone. Also, and most important, the recently-appointed CEO Kare Schultz has yet to offer details on any actions to be taken moving forward.

Humbled

"We wish we had arrived at this conclusion sooner and at higher prices," Gilbert wrote. "We are disappointed that the company has continued to be negatively surprised vs. its own assumptions, and it's hard to know if new systems/processes are required, or simply a new approach to setting expectations."

Nevertheless, investors should have reason to be "hopeful" that Schultz has the necessary vision to take "decisive actions" and has the support of the company's board of directors. Teva's financial, strategic, operational position and outlook would improve. But until this is detailed to investors over the months ahead, the company's "temporarily depressed equity value" may stay in place.

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