Why Teva Pharmaceutical Stock Surged This Week
Key Points
Teva posted its Q2 results this week, reporting an earnings miss even though sales beat expectations.
The company's forward guidance didn't deliver big surprises, but it looked solid enough.
Investors were bullish on the company's announcement that it will be replacing its ADRs with common stock on Sept. 14.
- 10 stocks we like better than Teva Pharmaceutical Industries ›
Teva Pharmaceutical (NYSE: TEVA) stock closed out the last week of trading with significant gains, rising roughly 12.3% across the stretch. The S&P 500 gained 0.2% over the same period, and the Nasdaq Composite was up approximately 0.5%.
Teva published its second-quarter report after the market closed on July 29, posting mixed results. While earnings for the period came in below Wall Street's target, the company delivered some news that excited investors.
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Teva's Q2 results at a glance
With its Q2 report, Teva announced non-GAAP (adjusted) earnings of $0.02 per share -- a performance that fell far short of the average analyst estimate's call for adjusted earnings per share of $0.11 in the period. Meanwhile, sales in the period came in at $4.1 billion and surpassed the average analyst target by roughly $70 million. The generic drug leader's revenue was still down roughly 1% year over year in the period, but the decline was softer than expected -- and investors saw promise in the company's guidance and a significant new development for the stock.
What's next for Teva?
For the full-year period, Teva is guiding for adjusted earnings to be between $1.91 per share and $2.11 per share after accounting for closing and administrative costs stemming from its acquisition of Emalex. Meanwhile, the average analyst estimate had called per-share earnings of $2.16 for the year. The company also guided for sales to come in between $16.5 billion and $16.85 billion. For reference, the average Wall Street estimate had targeted sales of $16.63 billion.
With its Q2 report, Teva also announced that it was gearing up to have its stock listed directly on the New York Stock Exchange. As part of the initiative, the Israel-based company's American depositary receipts (ADRs) are set to be replaced with newly listed common stock. The new common stock is set to start trading on September 14, and the direct listing could help attract support from institutional investors and retail traders.
Should you buy stock in Teva Pharmaceutical Industries right now?
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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