Teva Pharmaceutical Industries Ltd (TEVA)

[genisi]

From Credit Suisse report, analyst Marc Goodman, 14 February 2007
(If someone wants the full report, please PM me your email).

Solid Guidance; It's Amazing How Low Expectations Were

Our Takeaway.

We were surprised by the follow through in the stock especially after the recent
run up. We attribute it to the guidance for the 2007-2009 period, which was
basically in line with our estimates; however, we obviously didn’t appreciate how
low investor expectations were for the numbers.
With respect to 2007, the year is heavily back-end loaded and we have to
assume Teva will be doing additional deals like it did with Wellbutrin XL in order
to achieve much higher than the low end of its guidance range. In fact, we have
to admit, we struggle to even see how it can reach the bottom of the EPS
guidance range given what we know today.
We have been fairly positive on the stock recently in the low $30s, believing that
growth in the international business as well as the respiratory franchise is
underappreciated. We still think that this is the case, but given that the market
appears to have blessed the $2.50 in 2008 and $3.00 in 2009 company EPS
forecasts, and we don’t see significant upside to those numbers, it is difficult to
be excited about the name at $37.
Our year end price target has increased modestly to $40, based on a 15x P/E
multiple of our 2008e cash EPS estimate of $2.67 (equivalent to a 16x P/E
multiple of our 2008e GAAP EPS estimate of $2.54).