On Friday, JPMorgan adjusted its stance on Teva Pharmaceutical Industries Ltd (NYSE:TEVA), upgrading the stock from Underweight to Neutral and increasing the price target to $14 from $11. The revision comes as the company approaches significant upcoming events, including expected phase 3 data for olanzapine LAI and interim phase 2 data for its TL1A program, both anticipated in the second half of 2024.
Teva has been actively advancing its innovative pipeline, which has included effective partnerships to mitigate financial pressures on margins typically associated with such developments. One of Teva's treatments, Austedo, has shown positive performance following increased investment, which has helped balance the weaker results from the North American generics sector.
Despite these advancements, JPMorgan maintains a cautious perspective on certain aspects of Teva's operations. The analyst pointed out that, excluding Revlimid, Teva's North American generics business has not met expectations. There is also skepticism regarding the ability of biosimilars to compensate for the potential decline in Revlimid sales post-2026.
The company's fourth-quarter results highlighted some challenges, with generics sales in both the United States and Europe falling short of projections, and gross margins also coming in below expectations. These factors were somewhat tempered by a $500 million payment from a partnership related to the TL1A program.
In conclusion, JPMorgan's revised outlook reflects a more balanced view of the risks and rewards associated with Teva's stock, leading to the Neutral rating and updated price target of $14.
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