BofA Upgrades Teva Pharmaceutical On Possible Opioid Deal

Prospects of a global opioid deal getting done in 2022 suggest a “potential path to upside” for Teva Pharmaceutical Industries Ltd.’s TEVA stock, according to BofA Securities.

The Teva Pharmaceutical Industries Analyst: Jason Gerberry upgraded the rating for Teva Pharmaceutical Industries from Underperform to Neutral, while maintaining the price target at $9.

The Teva Pharmaceutical Industries Thesis: While there had been concerns over Teva Pharmaceutical’s “lower quality EBITDA trajectory,” the company now has a better product portfolio for 2023-2024, which “should help with the optics of the financial profile,” Gerberry said in the upgrade note.

“Assuming the opioid issue is resolved near to medium term, this should allow some upside in the stock as investors can shift attention to the company’s biosimilar launches and Austedo, while the risk is that no deal gets done and the stock remains a ‘value trap’,” the analyst wrote.

“In sum, we believe TEVA’s profile has improved and trending to hit ’23 financial targets, thus we believe there’s enough basis to upgrade to Neutral; given right-sizing of the cost base we see less risk if the CEO doesn’t extend beyond Nov 2023 and ability to absorb long-dated opioid resolution liability,” he added.

TEVA Price Action: Shares of Teva Pharmaceutical Industries had risen by 6.07% to $8.40 at the time of publication Tuesday morning.