Credit Suisse Lifts Teva Price Target, Says Execution Is Key For Migraine Drug

FDA approval of Teva Pharmaceutical Industries Ltd (ADR) ADR TEVA's migraine preventive medication Ajovy led Credit Suisse to raise its price target for the stock Monday. 

The Analyst

Credit Suisse analyst Vamil Divan maintained a Neutral rating on the shares of Teva and increased the price target from $23 to $26.

The Thesis

The FDA approval for Teva's Ajovy is an important potential growth driver, even as the company battles challenges it is facing with Copaxone, U.S. generics and its bloated debt load, Divan said in a Monday note. (See the analyst's track record here.) 

Credit Suisse moved up its launch timing estimate from the second half of 2019 to the fourth quarter of 2018 and increased the peak sales estimate due to the inclusion of quarterly dosing in the label.

As opposed to Amgen, Inc. AMGN-Novartis AG (ADR) NVS combo's drug and Eli Lilly And Co LLY's pipeline candidate, Ajovy is also approved in quarterly dosing, the analyst said. Ajovy comes in a pre-filled syringe as opposed to the auto-injector setup of competitors, he said. 

Divan said he expects a positive stock reaction. Credit Suisse's new price target accounts for the recent approval of Teva's generic EpiPen and near-term currency headwinds, he said. 

The analyst said he is watching how Teva markets this important asset in the coming months before becoming constructive on the stock's longer-term outlook.

Credit Suisse nudged down its EPS estimate for 2018 from $2.79 to $2.78 and lifted estimates for 2019 and 2020 from $2.82 and $2.79, respectively, to $2.88 and $2.89.

The Price Action

Teva shares were trading up 2.58 percent to $23.44 at the time of publication Monday. 

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