TEVA

Around the Horn in Biotech/Pharma: 3Q Earnings Review

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The biotech (IBB) and pharma (XLV) industries have been two of the strongest-performing segments of the market since the March 2009 panic bottom during the Financial Crisis, but the broader healthcare arena has been under siege as of late. New discoveries underscored by the development of a cure for hepatitis C with Gilead’s (GILD) Solvadi/Harvoni and a huge step forward in cystic fibrosis treatment with Vertex’s (VRTX) Orkambi have helped fuel the exuberance, but established pharma entities have also caught a bid as they successfully worked through the “patent cliff,” capturing the wave of dividend growth investors and acquiring budding new pipelines from smaller rivals along the way. The past few months haven’t been kind to biotech investors, however. What … Read more

Recent M&A Activity

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Amid the recent market volatility, firms have remained active in M&A. Let’s take a closer look at what companies will be joining forces. DENTSPLY and Sirona to Join Forces DENTSPLY (XRAY) and Sirona Dental Systems (SIRO) announced September 15 that they have entered an all-stock merger agreement. The resulting company will be the world’s largest manufacturer of professional dental products and technologies. Under the proposed agreement, Sirona shareholders will receive ~1.8 shares of DENTSPLY for each existing Sirona share. If the transaction receives regulatory and shareholder approval, it is expected to close in the first quarter of 2016, and the combined company expects the merger to be accretive to adjusted earnings per share for both companies’ shareholders in the first … Read more

Best Ideas Newsletter Holding Teva Surges!

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On July 27, Teva Pharmaceuticals (TEVA) reported solid preliminary results for the second quarter of 2015. The firm is growing organically, and its fundamental strengths shone throughout its report. Revenue increased 6% in the period, after excluding the impact of currency headwinds and the sale of US OTC plants in the second quarter of 2014. Non-GAAP operating income grew 16% from the year-ago quarter to $1.6 billion, and non-GAAP earnings per share increased 15% to $1.43 in the period. Cash flow from operations advanced an impressive 41% to $1.5 billion in the second quarter, and free cash flow grew 51% to $1.3 billion in the period. The solid bottom line performance caused management to raise its earnings per share guidance … Read more

Guide to Second Quarter Earnings; Big Pharma Experiencing Earnings Momentum

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Abbott (ABT) Abbott is one of our favorites in Big Pharma. We know many of you hold the stock in your own portfolios, and frankly, the company is one of the best operators in its industry. Abbott’s second-quarter performance revealed continued strength in its global diagnostics and branded generics businesses. Foreign currency exchange headwinds have posed problems for almost every multi-national in our coverage, but on an operational basis, second-quarter worldwide sales leapt nearly 10%. Abbott kept its full-year 2015 adjusted EPS guidance range from continuing operations unchanged at $2.10-$2.20, a rarity across a pharma universe that’s experiencing fantastic earnings momentum as of late. Keys to the Quarter: We were very pleased with the traction witnessed in Abbott’s pediatric nutrition … Read more

Teva Pharmaceuticals Committed to Acquiring Mylan

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Image source: Teva July 5 investor presentation We have been adamant on our stance on Best Ideas Newsletter portfolio holding Teva Pharmaceuticals (TEVA) since the initiation of our thesis on the generics industry in June 2013, shortly before we initiated our position in the firm. Since then shares have advanced nearly 50%, and we’ve continued to let this winner run.   A large portion of Teva’s success has been tied to the incredible performance of Copaxone, the leading multiple sclerosis therapy worldwide. In the first quarter of 2015, the drug alone comprised 18.5% of revenue, while contributing an astounding ~55% of net income. These figures are down from the year-ago period–and the majority of its production life–due in part to … Read more

Things for Your Radar Tuesday

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Hearing that: Windows 10 launch will be at the end of July. Positive for Microsoft (MSFT). Teva Pharma (TEVA) and Mylan (MYL) looking to tie the knot. Teva getting a nice bounce. IBM’s (IBM) top-line still weak. No interest in shares. Big Blue is not the blue chip equity it once was. Legacy Reserves (LGCY) cuts dividend. No surprise here. We’ve been expecting this for some time. Under Armour (UA) is too rich for our taste. Shares are off after first-quarter report. Rio Tinto (RIO) sees sharp drop in first-quarter iron ore shipments. We’re not interested in adding. ITW (ITW) suffering from guidance cut. Industrial bellwether supporting case that the industrial economy is slowing a tad. Hasbro (HAS) has a … Read more

Mylan’s Deal for Perrigo Boosts Teva

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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 … Read more

Some Wiggle Room, Please

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Let’s go around the horn. Staples (SPLS) and Office Depot (ODP) will, in fact, join forces. The duo announced February 4th that Staples will pay $6.3 billion for its rival, valuing Office Depot at $11 per share, a nice premium to its previous day close and relative to our fair value estimate. Management expects to generate at least $1 billion in annualized cost savings. Removing redundant overhead, streamlining distribution and carving out other efficiencies will be par for the course. We also think pricing will ease up a bit, though competition from Walmart (WMT) and Amazon (AMZN) will always be present. We wouldn’t expect Office Depot’s equity to converge to the take-out price until the regulatory review is completed, likely … Read more

4 Opportunistic Stocks To Consider Buying in 2015

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The Valuentum Buying Index (VBI) is a philosophy that considers the valuation of a company and the likelihood that a company’s stock will converge to a cash-flow derived fair value estimate. The VBI accepts the view that value is based on the sum of a company’s future expected discounted free cash flows and the excess cash on its balance sheet, while acknowledging that market participants must eventually agree with a firm’s underpricing (and buy the stock) in order to drive the stock’s price to fair value. An underpriced stock with no buying support is not poised to generate good returns, nor is an overpriced stock with good momentum as it will eventually succumb to panic selling once euphoria fades. Stocks … Read more

Valuentum Update – Post-Thanksgiving

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Hi members, We hope you had a long and happy holiday weekend with your families! I wanted to touch base today for a variety of reasons. I received a few emails over the holiday weekend regarding a couple of the newsletter portfolio holdings that are trading down with the markets.  Nothing out of the ordinary, but for those who are new to the stock market, this may be a bit startling and confusing. If you didn’t know already, we target the best ideas to converge to intrinsic value over a 12-24 month period, and sometimes longer, if market conditions do not cooperate. First, you should be aware of the collapse in crude oil prices (1). As it relates to the … Read more