Why This Teva Pharmaceutical Analyst Is Turning Bullish On The Austedo Franchise

Shares of Teva Pharmaceutical Industries Ltd TEVA climbed in early trading on Monday, after several analysts raised their forecasts.

The stock seems poised for a recovery due to the Austedo franchise, the improved positioning of the U.S. generics business and a better capital structure, according to Piper Sandler.

The Teva Pharmaceutical Industries Analyst: David Amsellem upgraded the rating for Tel Aviv-Yafo, Israel-based Teva from Neutral to Overweight, while raising the price target from $12 to $19.

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The Teva Pharmaceutical Industries Thesis: The Austedo franchise is well positioned due to a growing addressable market (more diagnoses), only two market participants, and an XR (extended release) form of the tablet that “essentially levels the playing field” with Neurocrine Biosciences, Inc’s NBIX Ingrezza, Amsellem said in the upgrade note.

The Austedo franchise could account for around 10% of Teva’s revenues in 2024, which is likely to grow to around 16% by 2028 and to about 18% by 2032, the analyst stated.

“For a product with exceedingly high gross margins (most likely not unlike what we see for Ingrezza), along with the ability to drive operating leverage (e.g., there is not a general practitioner prescriber base here; direct-to-consumer (DTC) activities can essentially become an annual fixed cost), the Austedo franchise can readily drive corporate EBITDA stability for Teva (at a minimum),” he added.

TEVA Price Action: Teva shares spiked 6.82% to $12.84 at the time of publication on Monday.