Teva Pharmaceutical Industries Limited (NYSE: TEVA) announced its fiscal 2016 first-quarter earnings and revenues that beat analysts’ estimates. Following the results, the share price closed at $52.87 on Tuesday. Considering the overall difficult business environment and the sales growth in the specialty drugs segment, presently, a long position in the counter would be a better choice for a trader.
During the fiscal 2016 first-quarter, the company reported revenue of $4.8 billion, down 3% from $4.982 billion in the similar period of fiscal 2015. The first-quarter revenue, however, rose above the analysts’ estimates of $4.77 billion. On a constant currency basis, the decline in revenue was only 1% on a y-o-y basis.
For the first quarter, the Israel-based pharmaceutical company recorded non-GAAP earnings of $1.106 billion or $1.20 per share, compared to $1.165 billion or $1.36 per share in the corresponding period last year. The Wall Street estimates were $1.17 per share for the first quarter of fiscal 2016.
The company lost exclusivity in drugs such as Nexium and Pulmicort. This had a negative impact of $427 million on the revenue. Overall, the company’s generic drug sales declined 17% to $2.2 billion. However, the decline was almost negated by a 10% rise in the sales of specialty drugs, which contributed $2.2 billion to the total revenue of Teva. In particular, the company’s blockbuster drug Copaxone registered a 9% growth in sales to a little over $1 billion. Similarly, on a y-o-y basis, ProAir and QVAR, the respiratory drugs of Teva recorded an increase in sales of 40% and 37% respectively.
The company also gave optimistic second-quarter guidance. For the second quarter, Teva anticipates revenue in the range of $4.7 billion and $4.9 billion. The non-GAAP earnings are expected to be in the range of $1.16 and $1.20.
The European regulators have already given clearance for acquiring Actavis Generics from Allergan (NYSE:AGN). The $40.5 billion deal is yet to receive clearance from the Us Federal Trade Commission (FTC). Teva hopes that it would be able to conclude the deal by June 2016. Such a scenario would benefit Teva in a big manner.
Technically, the stochastic indicator shows an oversold scenario. The first major resistance for the stock is at 57. In the case of a decline, support can be expected to emerge near 50 levels.
Thus, a binary options trader should scout for a one-touch call option contract. Choosing a termination date in the second week of June would benefit a favorable outcome from the trade. A strike price of $60 or below is recommended for the trade.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
