Summary
Having been in existence for more than a century, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) has during that time influenced the development, marketing and production of a wide range of generic and OTC products, specialty medicines, new therapeutic treatments and active pharmaceutical ingredients. Teva, ranked among the world's top 10 pharmaceutical companies, is pursuing a path of robust organic growth as it continues to expand into new markets and is committed to balancing its growth via returns to its investors. With headquarters in Israel, Teva is active in 60 countries and employs 46,000 people worldwide.
Although Teva has an attractive vision and its impact is global, its financial performance has been less than stellar over the past year. As a result of the company's unsteady performance, many analysts rate the company's stock as a "hold."
Financials
One of the most disturbing areas for Teva is its balance sheet. In the most recent quarter, the company reported total cash of $1.25B and total debt of $12.46B, which has given it a huge black eye. As a result, many investors and media outlets are beginning to question the stability of Teva's finances. On Sept. 26, a fool.com report was one of the first to question Teva's Q2 2013 performance. The company's Q2 report showed an operating profit loss of $586 million, with the majority of the damage arising from a $930 pantoprazole patent litigation and a $485 million provision related to antitrust litigation over the drug modafinil.
In the same quarter, net sales of the company's specialty medicines rose 5.23%, with the majority of this coming from an increase in sales of its copaxone treatment in the U.S. Sales of copaxone accounted for 20% of the company's revenue in the period. Teva also experienced a quarterly revenue loss of 1.4%, while on a 52-week basis it decreased 7.49%. It is estimated that the company show a growth loss of 6.5% in 2013, while the industry as a whole is expected to increase by 6.8% and the sector by 14.2%. Such numbers might cause investors to sell and run, but analysts are maintaining their "hold" ratings on the stock.
Teva's financial status has not always been so gloomy. Over the past five years, the company's share price rose by an annual 14.57%. Because of its litigation battles, the company is expected to generate annual growth of only 2.37% over the next five years. Such bleak numbers could be a turnoff for many investors, but Teva plans counteract this decline by launching 20-25 new generic products in 2013, according to finance.yahoo.com.
Conclusion
Many market watchers are wondering whether Teva will be able to recover from its losses. Predictions for the next five years look dim, so we are left to see what will happen next. If investors decide to start bailing out of the stock, this could spell bad news for the company's future. Among the things to keep in mind are the strength and life expectancy of its products. With a long and strong reputation for its products and services, Teva is not expected to fall completely flat, but how far it will fall is the real question. At this moment, no one can really say.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.