Can $TEVA Keep It Together?

Written by: Eric Chavez (MTTS Administrator)

Background:
We all feel that there are hundreds of pharmaceuticals stocks to choose from to shove down our throat and buy or short only an arm reach away from grandma’s medicine cabinet. Looking past the opioid epidemic in America, we are taking a look at $TEVA as a stand out this week up 25% this week since Monday rallying off news of TEVA board members appointing 30 year pharma industry veteran Kåre Schultz, current head of H. Lundbeck A/S and former COO of Novo Nordisk A/S (ADR) (NYSE:NVO), its president and CEO. The CEO’s new strategy is to refocus central nervous system disorders and respiratory diseases for specialty medicines.

Fundamentals:
• $TEVA (US: NYSE) TEVA: (%) known as Teva Pharmaceutical Industries Ltd. ADR is an Israeli multinational pharmaceutical company leading pharmaceutical services company focusing on generic and specialty medicine.
• $TEVA operates under CEO Yitzhak Petersburg as the largest generic drug manufacturer in the world, which has declined over 45% Year to Date (YTD) due to a decline in profit margins in the generic pricing of its drugs.
• $TEVA has a current market cap of $18.29 billion with over 1.2 billion shares outstanding.
• As of 08/15/17 the current short interest is 41.93 million

Divestment:
• On September 12th, 2017 Teva Pharmaceutical Industries Ltd. entered a definitive agreement to sell its Paragard contraceptive device to CooperSurgical for $1.1 billion including Teva’s manufacturing facility in Buffalo, N.Y., which produces the Paragard product exclusively.
• In a one year timeframe Paragard’s business generated revenues of $168 million whose proceeds can be used to repay existing debt.

Analyst Ratings:
1. Research Team- Reduce Rating (Updated: 9/11/17)
2. CFRA- 3 out of 5 stars (Updated: 09/03/17)
3. Ford Equity Research- Hold Rating (Updated 8/31/17)
4. The Street- Sell Rating (Updated: 09/09/17)
5. Market Edge- Avoid Rating (Updated: 09/07/17)

Technical Analysis:

                                                                                                     Target 1: $21.5
                                                                                                     Target 2: $23
                                                                                                     Target 3: $26.50
                                                                                                     STOP: $16
                                                                                                     Long Term Target: $30

The 1 year daily chart of $TEVA shows that the stock is recovering from its high in August 2015 at $72.31 towards it low in September 2017 at $15.22. The chart above created a purple downward sloping trendline created from the high of January 2017 trading at around $37 drifting toward a lower high of $23.25 in August 2017. The stock failed to break above this major line of resistance at $32.25 (i.e., price needed to break above prior high to sustain upward momentum) acting as resistance leading the stock to fall major support and all major moving averages following unsatisfactory earnings of the company which failed to impress major analysts leading to multiple downgrades of the stock.

The stock has managed to bounce off the 20-day simple moving average around the $16 price area which shows potential that the stock has bottomed out, and has begun to show a real reversal higher retesting prior highs if it can break above the 50-day simple moving average at around the $23.25 price area.

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