This post was originally published on this site
According to the firm, their previous Sell thesis based on disappointment from Humira and management transition has played out. The firm expects Teva’s gross margin to recover in the near term, some of which has already been factored into the stock’s recent recovery.
After experiencing a decline in gross margin during Q1 due to an unfavorable portfolio mix and inflationary pressure, UBS anticipates a swift recovery. This recovery will be facilitated by an enhanced product mix and tapering inflation.
The firm expects that the product mix shift towards more of a contribution from branded revenue will bolster the gross margin for the fiscal year 2023. Their projected gross margin for 2023 stands at 52.0%, slightly below the Street estimate of 52.5%.
The company is also considering a sale of its low-margin API business ($2 billion active pharma ingredients unit), according to the Bloomberg article yesterday.
Further, the firm sees a period of balanced risk/reward for the stock with limited topline growth. Their 3-year CAGR estimate stands at 0.6%, compared to the Street estimate of 1.2%.
