Teva Pharmaceutical Industries is the highest-rated stock among the biggest drugmakers. It was in March 2010, when American depositary receipts peaked at $64.84. And it still is now, even after a 41% drop, Bloomberg reports. Of the 32 analysts following the Israel-based generics giant, 25 call Teva a buy, and 7 rate it at "hold."
So what gives? Partly, it's psychology, experts tell the news service. Analysts are human, too, and they have a difficult time acknowledging mistakes, just as most people do. Even as the setbacks began to accumulate, it was easy to assume that the market was overreacting, University of Michigan's Erik Gordon told Bloomberg.
Let's review those setbacks: European governments slashed drug prices just as Teva snapped up German generics maker Ratiopharm. Teva's multiple sclerosis drug Copaxone got a new competitor in Novartis' oral treatment Gilenya. Manufacturing problems put a damper on recent U.S. sales. And two trials of Teva's experimental MS pill delivered disappointing results.
Ironically, however, those "buy" ratings might now be right. With Teva shares trading at around $38, Sanford C. Bernstein analyst Ronny Gal suggests that they're finally a real bargain. And though Cowen & Co.'s Ken Cacciatore now says his recommendations last year were wrong, "and we acknowledge it," he figures that, at this price, investors should buy.
- read the Bloomberg story
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