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Teva (TEVA) to Report Q1 Earnings: What's in the Cards?

Teva Pharmaceutical Industries Ltd.TEVA will report first-quarter 2018 earnings on May 3, before the market open. In the last reported quarter, the company delivered a positive earnings surprise of 14.81%.

This generic drug maker's shares have lost 5.1% this year so far compared with the industry 's decline of 5.9%.

Teva's earnings surpassed expectations in only one of the last four quarters, met the same in one and missed expectations in the remaining two, resulting in an average positive surprise of 0.49%.

Teva Pharmaceutical Industries Ltd. Price and EPS Surprise

Teva Pharmaceutical Industries Ltd. Price and EPS Surprise | Teva Pharmaceutical Industries Ltd. Quote

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

Factors to Consider

Increased pricing erosion, volume declines in the U.S. Generics unit, rapid erosion in sales of Copaxone and declines in sales of several other products in the Specialty segment are expected to hurt Teva's top line in the first quarter.

Significant competitive and pricing pressure in the generics industry is hurting sales of Teva's Generics unit. The ongoing consolidation of customers in the generics industry is resulting in increasing price erosion and decreasing volume. Accelerated FDA approval of additional generic versions of competing off-patent medicines, increased competition for its largest product - Concerta authorized generic - and stringent government regulations are also hurting sales.

Meanwhile, in the Specialty segment, loss of exclusivity of key drugs like Copaxone, Azilect and Nuvigil and divesture of some non-core assets in the Women's Health business will hurt sales.

Sales of blockbuster multiple sclerosis (MS) treatment, Copaxone are likely to erode due to lower volumes of the 20 mg and the 40 mg formulation, which are facing generic competition. Glatopa, a generic version of Copaxone 20 mg, is being marketed by Momenta and Sandoz - Novartis' generic arm - since 2015 while Mylan MYL launched its version of the 20 mg formulation in October 2017. In the same month, in a major blow to Teva, Mylan launched (at-risk) its generic version of the 40 mg thrice-weekly formulation, much earlier than expected.

With the entry of the generic version of the 40 mg formulation and the entry of a second generic version of the 20 mg formulation, there has been rapid erosion in sales of Copaxone. Moreover, a second generic version of the 40 mg formulation (Glatopa) was launched by Sandoz in February this year, much earlier than its scheduled launch in April.

To combat the rapid decline in sales, in December, Teva announced a restructuring plan that will see more than 25% of the company's global workforce being laid off over the next two years with the majority expected in 2018. An update on the progress made so far on the restructuring plan is also expected on the call.

Earnings Whispers

Our proven model does not conclusively show that Teva is likely to beat on earnings this quarter. This 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: Its Earnings ESP is +2.71% as the Most Accurate estimate stands at 70 cents per share while the Zacks Consensus Estimate is pegged lower at 68 cents per share. 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 (Sell). We caution against stocks with a Zacks Rank #4 or #5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

AMAG Pharmaceuticals, Inc. AMAG has an Earnings ESP of +31.28% and a Zacks Rank #3. The company is scheduled to release results on May 3.

Celgene Corporation CELG has an Earnings ESP of +0.63% and a Zacks Rank #2. The company is scheduled to release results on May 4. You can see the complete list of today's Zacks #1 Rank stocks here .

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AMAG Pharmaceuticals, Inc. (AMAG): Free Stock Analysis Report

Celgene Corporation (CELG): Free Stock Analysis Report

Teva Pharmaceutical Industries Ltd. (TEVA): Free Stock Analysis Report

Mylan N.V. (MYL): Free Stock Analysis Report

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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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