Image Source: epSos .de
We outlined the case on Best Ideas portfolio holding Teva (TEVA) in our generics industry thesis here. The company was added to the portfolio July 24, 2013 at $41.22 per share. Teva Pharma’s shares are now trading north of $66 each, converging to our fair value estimate in just less than two years. With valuations stretched throughout much of our coverage universe, we’re going to continue to let this winner run.
Driving the firm higher April 8 was news of Mylan’s (MYL) bid for Perrigo (PRGO) at a significant premium to the latter’s share price. Under the conditions of the non-binding proposal, Perrigo shareholders would receive $205 in a combination of cash and Mylan stock for each Perrigo share, a takeout price that’s nearly 30% greater than Perrigo’s 60-day average share price. We don’t cover Perrigo, but the lofty premium speaks to the multiples acquisitive firms are willing to pay for valuable assets.
And Teva has some significantly valuable assets!
In late March, Teva bought Auspex Pharma (ASPX) in an all-cash transaction, and many are looking to Auspex’s lead product candidate SD-809–a potential treatment for disorders including Huntington’s Disease, Tourette Syndrome and Tardive Dyskinesia in pediatric patients–to be a big winner. Teva is also working closely with Ignyta (RXDX) these days, recently acquiring 1.5 million shares of its stock after offloading the rights and assets to four of its oncology development programs. Teva’s branded portfolio and generics business are sources of upside as well.
It’s always good to share the good news on a Best Ideas portfolio holding, and we trust you are pleased. We know that many had scooped the company up on our email transaction alert. Who can forget when we pounded the table on Teva in this May 2, 2014 article? We nailed it.
Let the good times continue.