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Teva Pharma 'uniquely positioned,' Jazz Pharmaceuticals set-up balanced - UBS

Published Nov 27, 2023 16:26
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JAZZ
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Investment bankUBS raised Teva Pharma (NYSE:TEVA) to Buy from Neutral and downgraded Jazz Pharmaceuticals (NASDAQ:JAZZ) to Neutral from Buy in separate notes to clients on Monday.

Analysts raised the TEVA price target to $13 from $11 per share, stating the brand transition is underway and launch acceleration/pipeline catalysts are the key focus.

"Teva is uniquely positioned to undergo a significant transition to a more brand-focused company, which we believe can drive stock outperformance," wrote the analysts.

"Going forward, we anticipate attention shifting to attractive brand assets, where investors get to participate in launch acceleration and pipeline de-risking catalysts," they added. More than 20% of Teva's '27-'30E sales (vs current 11%) can come from high-growth brands, with potential for upside, while mature business stabilizing supports strong FCF. Although sell-side expectations have come up on some brands/pipeline products, we believe that the stock is not pricing in brand transition."

Meanwhile, the JAZZ price target was cut to $135 from $170, with analysts stating the investment bank has concerns about sleep franchise growth.

"Early competitor launch metrics imply potential downside for JAZZ's Sleep portfolio," the analysts stated. "Our estimated 4-yr forward Sales/EPS CAGR is 5%/5% vs cons 5%/7%."

While UBS believes some of the competitive headwind is already baked into the stock, it sees the set-up as balanced at current levels.

"The next logical step we see for JAZZ would be to pursue Business Development, which we believe is unlikely to drive stock upside," added the analysts.

Teva Pharma 'uniquely positioned,' Jazz Pharmaceuticals set-up balanced - UBS
 

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