Unjustified Sell-down Post-Q1 2018 Results Announcement
Teva Pharmaceutical (TEVA) reported market-beating Q1 2018 results before the market opened on Thursday. While its share price expectedly gained as much as 8 percent in pre-market trading and opened up 3.5 percent from the previous day’s close. Unfortunately for the longs and somewhat puzzling, it eventually ended the day down 4.4 percent. Besides the better-than-expected income statement, there were more positives revealed during the earnings call. As such, I believe the share price weakness post-results is unjustified. Let me elaborate.
TEVA Price data by YChartsMarket-Beating Q1 2018 Results
Teva's Q1 2018 revenue was $5.1 billion, down 10% or 15% in local currency terms, compared with the same period last year. Kåre Schultz, Chief Executive Officer at Teva, attributed the weaker revenue primarily to the divestment of businesses, generic competition to Copaxone, and finally, to the unabated adverse market dynamics in the US generics market. Sales of Copaxone fell 40 percent in the US to $476 million from $797 million in the first quarter of 2017. Nevertheless, Wall Street had already factored in a revenue decline and Teva managed to beat the consensus forecast by $270 million or around 5 percent. Its Q1 2018 EPS at $0.94 also surpassed consensus estimates by $0.28.
