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Navellier Targets Teva
12/20/2002 12:00 am EST
Louis Navellier, editor of the Blue Chip Growth Letter, sold Teva Pharmaceuticals last year, due to its volatility. At the time, the Israeli-based generic drugmaker, was experiencing dramatically increasing volatility due to violence in the Middle East. Now, says Navellier, "The good news is that Teva's volatility has settled down, and it's a solid, conservative stock again." Here's his overview of these shares.
"Teva Pharmaceutical (TEVA OTC) is a buy below $42. Teva is an ideal stock for conservative investors. It is the largest generic pharmaceutical company in the world. Over 80% of Teva's sales come from North America and Europe. The company recently received FDA approval for Amoxicillin, which is the generic equivalent of GlaxoSmithKline's antibiotic Amoxil, which has annual sales of $63 million. There is a massive number of drug patents that will be expiring soon from Merck and other major pharmaceutical companies. Teva Pharmaceutical and other generic drug companies will continue to capture market share from the major pharmaceutical companies as these patents expire.
"Its best-selling drug is Copaxone, which is used to treat multiple sclerosis. The drug has been very successful, and it's steadily gaining market share against its rivals. Right now, Copaxone's market share is about 24%. Its market share in Europe is still pretty low, but Teva is working to close the gap. Last quarter, Copaxone generated $144 million in revenue, which is 51% higher than last year. Sales in the US rose 36%, but sales outside the US jumped by an amazing 130%.
"I'm also very impressed with Teva's financial condition. The company is able to maintain very high gross profit margins. One of the things I most like to see in a company is expanding profit margins. Last quarter, Teva had gross profit margins of 43%. Gross margins for last year's third quarter were 41%. Sales jumped 36% in 2000, and 19% last year. Through the first nine months of this year, sales are up 16%, and profits are 38% higher. The company is on track for another record year. The company will be able to earn about $1.78 a share for 2003, which gives it a forward p/e of about 22. The company also recently split its shares 2-for-1. This is good news since it will make the shares more liquid and easier to trade, which is especially important for foreign stocks."
The key risk-on and off drivers today are the same – U.S. politics, global growth, other centr...