Globes, Tel Aviv, Israel, Mali Ezra column: Deutsche Bank upgrades Teva
Monday, July 21, 2008; Posted: 03:50 PM
Jul 21, 2008 (Globes - McClatchy-Tribune Information Services via COMTEX) --
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PowerRating -- Following news of Teva's acquisition of Barr, Deutsche Bank has upgraded its recommendation for Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) to "Buy" from "Hold", and raised its price target on the generic pharmaceuticals giant. Deutsche Bank analyst David M. Steinberg, joined by Edward Y. Chung and Rosemary Wang, points to enhanced growth prospects over the next four years from the proposed combination with Barr. Steinberg also notes that in general terms, Barr is the fourth acquisition in the past four weeks, and shows the strong consolidation activity in specialty pharmaceuticals, with now 17 announced transactions so far in 2008, valued at $23 billion. By comparison, there were 21 announced transactions in 2007 and 19 in 2006. Teva will pay $7.46 billion in cash and shares for Barr, and assume about $1.5 billion in net debt. Deutsche Bank is bullish on the deal, given that its sees little overlap in the businesses of the two companies. Teva can also gain access, through Barr operations, to Eastern Europe. Deutsche Bank's Steinberg claims that "the combined entity should be now considered the undisputed leader in biogenerics". Barr has several "first to file" opportunities, which could add to Teva's earnings in 2009. Nonetheless, Deutsche Bank sees 2009 as a transition year for Teva as it deals with the Barr acquisition, with an improvement in 2010. Using its 2010 earnings per share estimate as its base, Deutsche Bank reaches a target price of $56 for Teva, an increase over its previous $47 price target. Shares in Teva rose over 3 percent to $44.21 by mid-afternoon in Nasdaq trading, giving Teva a market cap of $34.15 billion.
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