Bloomberg News

Teva Surges to Biggest Premium in New York: Israel Overnight

December 16, 2011

Dec. 16 (Bloomberg) -- Teva Pharmaceutical Industries Ltd., the world’s largest maker of generic drugs, advanced to a four- month high after it filed suit to defend a patent, helping lead a rally in Israeli stocks in New York.

Teva, based in Petach Tikva, Israel, gained 2.9 percent to $42.42, 81 cents more than shares in Tel Aviv, the highest premium among members of the Bloomberg Israel-US 25 Index. The measure of the largest New York-traded Israeli companies rose 2 percent to the highest since Nov. 15, outpacing gains in U.S. stocks. The TA-25 Index added 1.7 percent in Tel Aviv.

The drugmaker has gained for five days as signs the company can fend off competitors and an attractive valuation draw investors to the shares. Teva sued a competitor for violating a patent on a breast cancer drug, according to a complaint filed yesterday. In the past week, worries emerged over the safety of a competitor’s drug which may bring more patients to Teva’s multiple scelorsis treatment, and the company won a court decision to prevent a rival from selling a competing painkiller.

“Teva had been very badly beat up and a lot of that had been negative news,” said Judson Clark, an analyst at Edward Jones & Co. who rates the shares “buy.” “Now we’re starting to see the emergence of some positive catalysts and certainly a very attractive valuation.”

Teva is valued at 7.3 times next year’s earnings, lower than the $10.06 an investor would pay for each dollar of 2012 earnings on average for Israeli stocks in New York.

Concern among investors that Europe’s debt crisis will curb demand for Israeli exports has pushed the Bloomberg Israel-US 25 Index down 17 percent and the Israeli benchmark TA-25 Index down 18 percent this year. The Standard & Poor’s 500 Index advanced 0.3 percent, cutting its loss for the year to 3.3 percent.

Room to Cut Rates

Israeli inflation unexpectedly cooled to 2.6 percent in November, the slowest pace in a year. That leaves room for Israel’s central bank to cut interest rates, bolstering the economy.

“The Bank of Israel has many reasons to continue to decrease the interest rates,” said Alex Zabezhinsky, chief economist at DS Securities & Investments Ltd. in Tel Aviv, citing the slowing economy and decreasing international trade.

He said the Bank of Israel will cut rates to 2.5 percent at a meeting this month, and to 2.25 percent within two or three months. Three of 14 economists surveyed by Bloomberg expect the bank to lower the rate to 2.5 percent this month and the rest expect it to remain unchanged.

The shekel advanced for the first time this week, strengthening 0.2 percent to 3.8052 per dollar. The currency has fallen 7.4 percent this year, its worst performance since 2001.

Teva has slumped 19 percent this year amid concern that competition for Copaxone, the multiple sclerosis treatment that is its best-selling drug, will erode sales. The company has also introduced fewer generic drugs in the U.S.

Cephalon Suits

The safety of a competing multiple sclerosis treatment from Novartis AG was called into question earlier this week after a patient died a day after starting treatment. Whether the treatment, called Gilenya, played a role in the death can’t be excluded or confirmed, a Novartis spokesman said.

Teva’s Cephalon unit won a court decision Dec. 8 to prevent rival Watson Pharmaceuticals Inc. from selling a generic version of the painkiller Fentora until 2019.

Cephalon and Acusphere Inc. sued Celgene Corp. for patent infringement related to the breast cancer medicine Abraxane, according to a court filing yesterday.

Mellanox, Nice Systems

Mellanox Technologies Ltd., the adapter maker part-owned by Oracle Corp., gained 0.9 percent to 122.60 shekels, or $32.22, in its first day as a member of the TA-25 Index. The shares rose to $31.47 in New York. The 75 cent discount was the second- widest among Israeli stocks in the U.S.

Israel, whose population of 7.7 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq stock market, the most of any country outside North America after China. It is also home to the largest number of startup companies per capita in the world.

Nice Systems Ltd., the Israeli maker of surveillance and monitoring equipment, slipped 2.6 percent to $31.69. The Tel Aviv shares fell 2 percent to 124 shekels, the equivalent of $32.59. The 90 cent discount in New York was the largest among companies in the Israel-US index.

--Editors: Marie-France Han, Glenn J. Kalinoski

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus