TEVA Stock Down 7% Despite Q3 Earnings & Sales Beat, Guidance Increase

Teva Pharmaceutical Industries TEVA reported third-quarter 2024 adjusted earnings of 69 cents per share, which beat the Zacks Consensus Estimate of 65 cents. Adjusted earnings rose 15% year over year.Revenues for the third quarter came in at $4.33 billion, which beat the Zacks Consensus Estimate of $4.08 billion. Total revenues rose 13% on a reported basis and 15% on a constant currency basis.Sales growth was mainly driven by higher revenues from generic products globally and strong growth from branded drugs, Austedo, Ajovy and Uzedy. Sales of certain product rights in Europe and International Markets segments also contributed to sales growth.Generic Drugs Drive Sales in TEVA’s United States UnitSales in the United States segment (previously the North America segment) were $2.22 billion, up 17% year over year, driven by higher sales of generic products and branded drugs Austedo and Uzedy, partially offset by lower sales of other branded products Copaxone and Bendeka/Treanda. The segment’s revenues beat the Zacks Consensus Estimate of $2.07 billion as well as our model estimate of $2.0 billion.Generic/biosimilar product revenues rose 30% from the year-ago period to $1.09 billion in the United States segment due to increased revenues from a generic version of Revlimid and the launch of a generic version of Novo Nordisk’s NVO Victoza (in late June). Generic revenues beat the Zacks Consensus Estimate of $955 million as well as our model estimate of $876 million.Teva has a decent pipeline of biosimilars, with some being developed in partnership with Alvotech. A biosimilar version of AbbVie’s ABBV Humira called Simlandi was approved in February 2024 and launched in May. Selarsdi, a biosimilar version of J&J’s JNJ Stelara, was approved in April 2024, and per a settlement with J&J, Teva will launch the biosimilar in February 2025. Last month, the FDA accepted Teva’s application seeking approval for TVB-009P, a biosimilar candidate to Amgen’s bone drug, Prolia (denosumab). The FDA’s decision is expected in the second half of 2025.Huntington's disease drug, Austedo, recorded sales of $435 million in the United States, up 28% year over year. Sales were mainly driven by volume growth as prescription trends continued to grow. Austedo sales missed the Zacks Consensus Estimate of $437 million but beat our model estimate of $430.8 million.Ajovy recorded sales of $58 million for the quarter, up 4% year over year, driven by volume growth. Ajovy sales beat the Zacks Consensus Estimate of $56 million as well as our model estimate of $57.0 million.Ajovy’s market share in the United States increased in terms of the total number of prescriptions from 24.9% in the year-ago quarter to 29.1% in the reported quarter.For the first time, Teva separately announced sales of Uzedy (risperidone), a long-acting subcutaneous atypical antipsychotic injection for the treatment of schizophrenia, in the United States. The product, which was launched in May 2023, generated sales of $35 million in the third quarter compared with $2 million in the year-ago quarter.Copaxone recorded sales of $69.0 million in the United States, down 30% year over year, due to generic erosion and increased competition. Copaxone sales beat the Zacks Consensus Estimate of $49.9 million as well as our model estimate of $50.8 million.Combined sales of Bendeka and Treanda declined 28% from the year-ago quarter to $40 million. Sales of Bendeka and Treanda were hurt by generic erosion. Teva lost orphan drug exclusivity for bendamustine products in December 2022.Distribution revenues generated by Anda rose 3% year over year in the quarter to $380 million due to volume growth.TEVA’s Europe and International Markets Segment PerformanceThe Europe segment recorded revenues of $1.27 billion, up 10% year over year on a reported basis. Sales were up 11% on a constant currency basis, mainly driven by higher revenues from generic products and Ajovy and sales of certain product rights. Europe revenues beat the Zacks Consensus Estimate of $1.18 billion as well as our model estimate of $1.11 billion.Generic product revenues in Europe rose 8% in constant currency terms to $973 million. Copaxone sales declined 5% to $53 million. Revenues from Ajovy sales increased 36% on a constant currency basis to $56 million.In the International Markets segment, sales rose 4% year over year to $613 million. In constant currency terms, sales increased 18% from a year ago, driven mainly by higher generic revenues, partially offset by regulatory price reductions and generic competition to off-patented products in Japan. International Markets revenues missed the Zacks Consensus Estimate of $615 million as well as our model estimate of $659.4 million.The Other segment (comprising the sales of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $229 million, up 6% year over year on a reported basis and 5% on a constant currency basis.TEVA’s Margin DiscussionAdjusted gross margin was 53.7% for the quarter, up 20 basis points (bps) year over year, mainly driven by a favorable product mix (higher revenue from Austedo), partially offset by currency headwinds.Adjusted research & development expenses declined 5% year over year to $240 million. Selling and marketing expenditure rose 9% from the year-ago level to $626 million. General and administrative expenses increased 11% from the prior-year level to $298 million.Adjusted operating income rose 19.0% year over year in the reported quarter to $1.21 billion. Adjusted operating margin rose 150 bps to 28.0% in the quarter due to lower operating costs.TEVA Slightly Raises Guidance for 2024Teva slightly raised its revenue guidance from a range of $16-$16.4 billion to $16.1-$16.5 billion.Teva maintained its guidance for Austedo sales of approximately $1.6 billion and Ajovy sales of approximately $500 million in 2024. Teva raised its Copaxone revenue guidance to approximately $500 million from the previous expectation of approximately $450 million, reflecting lower-than-expected erosion from competing therapies. The revenue guidance for Uzedy was raised from approximately $80 million to approximately $100 million, reflecting solid growing demand for the product.Teva raised the lower end of its adjusted EPS guidance from a range of $2.30-$2.50 per share to $2.40-$2.50 per share.The company now expects adjusted operating income in the band of $4.2-$4.5 billion compared with the previously expected range of $4.1-$4.5 billion. Teva expects its adjusted EBITDA in the band of $4.7-$5 billion compared with the previous guidance of $4.6-$5 billion.Adjusted gross margin is expected to be between 53% and 54% in 2024. Operating costs are expected to be approximately 27% to 27.5% of revenues.Adjusted tax rate is expected in the range of 14-17%. Free cash flow is expected to be in the range of $1.7-$2.1 billion, while capital expenditures are expected to be approximately $500 million.Our Take on TEVA’s Q3 ResultsTeva’s third-quarter results were strong as it beat estimates for earnings as well as sales. Teva’s generics business sales increased 17% in the quarter, driven by growth across all regions. Ajovy registered growth of 21% globally, driven by improving market share in all regions. Austedo sales rose 28%. The company also slightly raised the lower end of its earnings and sales guidance. However, despite the earnings beat and guidance increase, the stock was down more than 7% on Wednesday as investors were probably not impressed with the guidance increase.Year to date, shares of TEVA have risen 66.9% against the industry’s decline of 5.3%.Image Source: Zacks Investment ResearchTeva faces challenges like competitive pressure on some key branded drugs and a high debt load. However, its newer drugs, Austedo and Ajovy, as well as a stable generics business are reviving top-line growth. With the nationwide settlement for the costly opioid litigations, new product launches, stability of the generics segment with contribution from biosimilars and a robust biosimilar and branded pipeline, the path for Teva’s long-term growth is becoming clearer. Teva is saving costs and improving margins through the optimization of operations for efficiency while also lowering the debt on its balance sheet.Teva plans to separate its API unit into a standalone business unit. The divestment is expected to be completed in the first half of 2025.TEVA’s Zacks RankTeva currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Teva Pharmaceutical Industries Ltd. Price and Consensus Teva Pharmaceutical Industries Ltd. price-consensus-chart | Teva Pharmaceutical Industries Ltd. QuoteFree Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Johnson & Johnson (JNJ): Free Stock Analysis Report Novo Nordisk A/S (NVO): Free Stock Analysis Report Teva Pharmaceutical Industries Ltd. (TEVA): Free Stock Analysis Report AbbVie Inc. (ABBV): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks