Teva shares hit 19-year low after opioid settlement, analyst downgrades

Teva shares have tumbled in recent months, reaching a 19-year low. (Pixabay)

Only months into his role as Teva CEO, Kåre Schultz seemed to have things on the right track, as far as analysts were concerned. He kicked off a massive restructuring and cut some of the company’s unprofitable offerings, among other efforts, and the company's share price quickly doubled.

But thanks to an $85 million opioid settlement in Oklahoma, Schultz may now be in a tougher spot than he started in. This week, after Teva inked the settlement, shares reached their lowest point in 19 years, Investor’s Business Daily reports. It also didn't help that two analysts downgraded the company during the week.

In a statement on the settlement, Teva reiterated its belief that the “courtroom is not a place to address the crisis.” The drugmaker added that it’s “pleased to put the Oklahoma case behind it and remains prepared to vigorously defend claims against the company," including in Cleveland federal court, where cases from around the country are grouped up.

But stock reaction this week has nevertheless been harsh. On Friday morning, Teva shares were trading under $9, down from more than $70 in 2015.

Adding to the drugmaker’s woes were a pair of analyst downgrades this week. Bank of America Merrill Lynch analyst Jason Gerberry downgraded the company two ratings to underperform, chopping his price target by more than half. 

RELATED: Why did Teva ink an $85M deal to sidestep the Oklahoma opioid trial?  

Gerberry downgraded the company for numerous reasons, including opioid litigation, MarketWatch reports. He sunk his price target to $9, from a previous target of $19. The rating cut comes in the wake of the settlement, which seemed to contradict Schultz's comments from a recent conference call indicating that the company wouldn’t be entering big settlements.  

In his own note downgrading Teva this week, UBS analyst Navin Jacob wrote that Teva’s liability in opioid litigation could reach $4.1 billion, significantly higher than his previous estimate of $1 billion, TheStreet reports

On a more positive note for the company, Teva also this week launched a generic to Gilead’s Ranexa, which pulled in $758 million last year. 

Teva isn’t contending with just opioid litigation. The drugmaker is also the central defendant in a generics industry price-fixing lawsuit filed by dozens of state attorneys general earlier this month. 

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