Teva Pharmaceutical shares jump after Goldman upgrades embattled drugmaker, predicts turnaround
The disastrous year for Teva Pharmaceutical (NYSE: TEVA) shareholders will improve in 2018, according to one top Wall Street firm. Goldman Sachs raised its rating to buy from neutral for the generic drugmaker, citing the company's aggressive cost-cutting targets for the next two years.The call sent the stock up 4 percent during Friday's premarket session."TEVA has turned a corner on December 14, with its announced $3bn of cost cuts by 2019 coming in well ahead of our expectation of $1-2bn by 2020," analyst Jami Rubin wrote in a note to clients Friday. "While we acknowledge there is skepticism on the path forward … we believe we are in the early innings of a credible turnaround led by a competent management team." The company announced Thursday it plans to lay off 14,000 employees or 25 percent of its workforce as a part of its restructuring plan over the next two years. The analyst increased her 12-month price target for Teva shares to $20 from $15, representing 16 percent upside to Thursday's close. Teva shares surged 10 percent on Thursday after announcing the cost-saving targets and layoffs.Teva shares are underperforming the market this year. Through Thursday, its stock is down 52 percent in 2017 versus the S&P 500's 18.5 percent return. The company repeatedly disappointed Wall Street with lower-than-expected financial guidance and weak results earlier this year.Rubin expressed confidence Teva's new CEO, Kare Schultz, who joined in November, will deliver on the cost-cutting projections. The executive has "repeatedly understated and over-delivered" at his previous job at Lundbeck, Rubin said. — CNBC's Michael Bloom contributed to this story. The disastrous year for Teva Pharmaceutical (NYSE: TEVA) shareholders will improve in 2018, according to one top Wall Street firm. Goldman Sachs raised its rating to buy from neutral for the generic drugmaker, citing the company's aggressive cost-cutting targets for the next two years. The call sent the stock up 4 percent during Friday's premarket session. "TEVA has turned a corner on December 14, with its announced $3bn of cost cuts by 2019 coming in well ahead of our expectation of $1-2bn by 2020," analyst Jami Rubin wrote in a note to clients Friday. "While we acknowledge there is skepticism on the path forward … we believe we are in the early innings of a credible turnaround led by a competent management team." The company announced Thursday it plans to lay off 14,000 employees or 25 percent of its workforce as a part of its restructuring plan over the next two years. The analyst increased her 12-month price target for Teva shares to $20 from $15, representing 16 percent upside to Thursday's close. Teva shares surged 10 percent on Thursday after announcing the cost-saving targets and layoffs. Teva shares are underperforming the market this year. Through Thursday, its stock is down 52 percent in 2017 versus the S&P 500's 18.5 percent return. The company repeatedly disappointed Wall Street with lower-than-expected financial guidance and weak results earlier this year. Rubin expressed confidence Teva's new CEO, Kare Schultz, who joined in November, will deliver on the cost-cutting projections. The executive has "repeatedly understated and over-delivered" at his previous job at Lundbeck, Rubin said. — CNBC's Michael Bloom contributed to this story.
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