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Teva (TEVA) Q4 Earnings: What's in Store for the Stock?

Teva Pharmaceutical Industries Ltd.TEVA will be reporting fourth-quarter 2016 and full-year earnings on Feb 13, before the market opens.Last quarter, the company delivered in-line earnings.

This generic drug maker's shares have lost 11.3% so far this year, while the Zacks classified Generic Drugs industry witnessed an increase of 2.1%.

Teva's earnings have surpassed expectations in two of the last four quarters and met the same in the other two, delivering an average positive surprise of 2.59%.

Teva Pharmaceutical Industries Limited Price and EPS Surprise

Teva Pharmaceutical Industries Limited Price and EPS Surprise | Teva Pharmaceutical Industries Limited Quote

Let's see how things are shaping up for this announcement.

Factors to Consider

Teva's generic segment could continue seeing weakness. The segment would remain under pressure due to pricing erosion as well as the absence of important product launches. Delays in product approvals and IP decisions as well as quality challenges experienced by third-party suppliers led to the lack of product launches in the third quarter. At the third quarter conference call, management had mentioned that these delays can hurt fourth-quarter sales, pushing some of the key generic product launches to the 2017-2018 timeframe.

Last quarter, U.S. legacy generics revenues declined due to lower sales of the generic versions of Pulmicort, Nexium and Xeloda, which resulted from loss of exclusivity and intense competition. We do not expect any improvement in the segment in the fourth quarter either.

In the fourth quarter, important launches included the generic versions of hypertension drugs Tribenzor, Azor and Beyaz (an oral contraceptive) in the U.S., which should provide some support to sales.

The EU generics segment will also remain under pressure with sales being affected by macro-economic conditions and healthcare reforms.

Meanwhile, in the branded segment, sales of both specialty products and blockbuster multiple sclerosis (MS) treatment Copaxone declined in the third quarter. It remains to be seen if sales pick up in the fourth quarter.

Investors will remain focused on Copaxone's performance. We expect management to comment on the setback it suffered last week with the U.S. District Court for the District of Delaware invalidating all asserted claims of the '250, '413, '776 and '302 patents for Copaxone 40 mg.

Teva continues to focus on its cost reduction program which should give its profits a boost.

Earnings Whispers

Our proven model does not conclusively show that Teva is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.32. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Teva has a Zacks Rank #4. As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks in the healthcare sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

BioMarin Pharmaceutical Inc. BMRN is expected to release results on Feb 22. The company has an Earnings ESP of 7.50% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Acorda Therapeutics, Inc. ACOR is expected to release results on Feb 14. The company has an Earnings ESP of 5.56% and a Zacks Rank #3.

AMAG Pharmaceuticals, Inc. AMAG has an Earnings ESP of +3.23% and a Zacks Rank #3. The company is expected to release results on Feb 14.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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