Teva Pharmaceutical Industries Ltd (TEVA)

[genisi]

Citigroup ups Teva target price to $54
http://www.globes.co.il/serveen/globes/docview.asp?did=1000211793&fid=942
The bank sees not acquiring Merck KGaA’s generic business as good news for Teva.
Adi Ben-Israel 14 May 07 18:54
In a report titled “No News is Good News”, Citigroup today raised its target price for Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) from $46 to $54, 35% above today’s market price, and reiterated its “Buy/high risk” recommendation. Citigroup considers the acquisition of the generic business of Germany’s Merck KGaA (XETRA:MRK) by Mylan as good news for Teva.

Citigroup says, “Teva had been involved in bidding for this asset and Mylan winning removes a significant overhang over Teva’s share prices, as investors worried about possible earnings dilution from buying Merck. We revisit our valuation, and find Teva is trading at 20.4x recurring forward PE, below its five-year average of 22.1x and far below the peak of 31.4x, achieved at end-2005.

“We also update our financial model for Teva, raising 2007 estimated earnings per share by 3% to $2.14 and cutting 2008 estimated earnings per share by 6% to $2.55. We publish our 2009 forecast of $3.00.

Citibank reiterates, “We believe Teva deserves to trade at a 10% premium to US generic drug stocks’ mid-cycle forward PE multiple of 18x.”