JPMorgan sees redemption in one of the stocks — and further decline in the other.
The Teva Thesis
With positive optics on Teva’s opioid exposure and stabilizing mid-term fundamentals, JPMorgan sees balance in the stock’s costs and benefits.
“We remain fairly bearish on the longer-term setup for the company between its lack of growth-drivers (Ajovy underperforming expectations so far, lingering LOEs, etc.) and still high-leverage (especially after taking into account potential cash flow going to opioids),” Schott said in a Tuesday note. (See his track record here.)
The Amneal Thesis
Amneal offers little opportunity for redemption, the analyst said.
After a series of poor earnings and lower guidance, the company’s turnaround depends on an unlikely pipeline success, according to JPMorgan.
“While some of the challenges facing Amneal do appear fixable (supply penalties, plant utilization, etc.), many appear fundamental (a function of the evolving dynamics in the US Gx market), and will likely take time and resources to fix (which the company is increasingly lacking at 7x leverage and with an ever-depressed equity value),” Schott said.
Teva shares were trading 1.93% higher at $9.51 at the time of publication Tuesday, while Amneal shares were up 4.36% at $2.76.
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