Goldman Sachs Names Teva Pharmaceuticals a Top Stock

Even though Teva (TEVA) has risen 33% this year, Goldman Sachs (GS) still believes that they have a long way to go. According to The Marker, at month's-end Teva will be announcing its second-quarter results. Goldman Sachs got in ahead of the event, and raised its estimate to 58 cents earnings per share in the quarter, and $2.28 per share for the year 2007. They put a 12 month target price for the stock at $48.

GS notes that positives for the stock include:

The launch of generic Lotrel, a medicine to beat high blood pressure that Teva released on May 18.

The copycat version of Oxycodone, a powerful and addictive opioid used to relieve moderate to terrible pain, is also popular among drug abusers.

ProAir, an inhaler that Teva inherited when buying Ivax Corp. Sales of ProAir have handily beaten expectations. Goldman Sachs notes that ProAir sales benefited “dramatically” from Teva marketing combined with the transition from inhalers that destroy the ozone layer, to environmentally-friendly ones.

On the other hand, competing Tysabri (developed by Biogen Iden) has been reinstated for use by select multiple sclerosis sufferers in Britain, where it competes with Teva Pharmaceuticals’ Copaxone as a therapy for the incurable neuri-degenerative disease. Tysabri had clinical problems when two patients taking their drug, died. However, Tysabri is staging a gradual comeback, mostly based on its sheer efficacy, not to mention the convenience of use. Other MS treatments such as Copaxone are typically administered by daily injection, while Tysabri is given as a monthly infusion.

Even though Teva Pharmaceuticals is the world’s biggest player in the generics space, it is still a company which active traders follow. This can lead to added volatility, and when the company has had a downturn in the past, shareholders have be beaten hard. Looking for dips might be a good strategy for someone who is trying to make some short-term gains in the stock, although over the long term, it still is the darling of many on Wall Street.

Disclosure: The author’s fund is currently long TEVA as of June 3, 2007, but does not own any of the other companies listed above.

TEVA 1-yr chart: