Teva Pharmaceutical: The Babe Ruth of the Investment World

With its stock up over 74x fold since its IPO in 1990, Israeli generic pharmaceutical manufacturer Teva Pharmaceutical Industries Ltd. (TEVA) is the "Babe Ruth" of the ADR world. The world's biggest maker of generic drugs recently increased its 2007 profit forecast after announcing it will start selling a copycat version of Wyeth's heartburn medicine Protonix.

Deutsche Bank (DB) yesterday raised its price target on Nasdaq listed Teva to $55 from $48 to reflect the potential from the Jerusalem drug maker's launch of a generic version of the acid-reflux treatment Protonix. The $55 figure is based on Deutsche analyst David Steinberg's view that in 2009 Teva will earn 18 times the firm's estimate of $3.08 a share. His estimate compares with the Wall Street average of $2.99 and Teva's multiple reflects a "20% premium to Teva's forward growth rate and [a] slight premium to the company's generic peer group."

The potential downside? Possible adverse legal rulings in patent challenges as well as negative trends in prescriptions for the company's flagship drug, Copaxone, a treatment for multiple sclerosis/ Teva's shares rose 33 cents, or 0.7%, on Wednesday to $46.81. Though the stock endured a rough patch of performance in the first half of 2006, Teva is up nearly 51% in 2007. Deutsche's $55 price target implies a 17% upside on the shares.

Disclosure: none