TEVA Stock Could Be in Trouble
Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) saw its TEVA stock plunge 5.5% after the company issued an update on its 2017 fiscal year earnings guidance on Friday morning.
The company provided a lower-than-expected earnings-per-share guidance at $4.90–$5.30 for the year, which is a sight below the Thomson Reuters Corp (NYSE:TRI) consensus earnings-per-share estimate of $5.41. The company’s revenue guidance also took a hit, falling to $23.8–$24.5 billion versus the consensus estimate of $24.91 billion. (Source: “Teva Pharmaceutical Industries Limited (TEVA) Issues FY17 Earnings Guidance,” The Cerbat Gem, January 6, 2017.)
The company specializes in the generic medicine industry; it acquires rights to branded drugs that can be quite expensive and produces alternative options at a reduced cost.
The company experienced a rough 2016, dropping about 43% over the year.
It’s not all bad news for TEVA stock, however. The company recently closed a deal for Allergan, Inc.‘s generic business. The announcement of the deal in 2015 helped spur on a surge in TEVA stock, though the multiple delays and other factors contributed to a steady decline in share value after the initial bump. (Source: “Teva Pharmaceuticals has acquired success with Actavis Generics,” World Finance, December 26, 2016.)
TEVA stock is looking like it will need a similar acquisition or another trigger event in order to help surge back up to its lofty highs of 2015. The company was trading at roughly double the value at that time compared to early 2017.
The pharmaceutical industry as a whole has faced challenges over the last year, with many inches of columns being written about the various scandals and price-hiking incidents that affected many big-name stocks. While TEVA Pharmaceuticals has been able to avoid such scandals, the company will need to find a way to bounce back after a dismal 2016.