Teva Downgraded As Analyst Casts Doubt On Turnaround Story

Based on the nearly 25-percent decline in Teva Pharmaceutical Industries Ltd (ADR) (NYSE: TEVA)'s stock price on Thursday, some investors and analysts have legitimate concerns over the company's earnings report and outlook. Among those on Wall Street who share this concern include Oppenheimer's Derek Archila, who downgraded Teva's stock from Outperform to Perform while no longer offering a price target (previous $41).

Teva no longer has a clear path towards a return to growth in the near-term and pricing pressure in the U.S. generics business adds to the pessimistic outlook, Archila explained. As such, Teva should no longer be considered as a company that can offer a growth story, especially since a top priority now is cutting costs and perhaps divesting some assets just to meet its debt obligations which stands at around $35 billion.

Meanwhile, Teva's Copaxone is likely to face a 40mg generic competition next year and this just adds another headline risk, the analyst added. In fact, the introduction of a generic competition could result in a "meaningful step down" in Copaxone sales next year.

Finally, the Israel-based company continues to operate without a permanent CEO and patience may be wearing thin as this has been going on for six months. This may signal that it's difficult to attract a meaningful pharmaceutical executive with the necessary experience to navigate the company through its ongoing challenges.

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