Teva Pharmaceutical Industries Limited (TEVA) is scheduled to report third-quarter 2014 results before the opening bell on Oct 30.
Why a Likely Positive Surprise?
Our proven model shows that Teva is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Teva has an Earnings ESP of +1.63%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.
Zacks Rank: Teva carries a Zacks Rank #1 (Strong Buy) which when combined with a +1.63% ESP makes us confident of an earnings beat.
Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
What is Driving the Better-than-Expected Earnings?
Teva’s U.S. generic segment should continue to perform well in the third quarter as well. The segment should benefit from the sales of the exclusive generic version of Roche’s (RHHBY) Xeloda. Teva launched another generic product – a generic version of Bristol-Myers’ (BMY) Baraclude – during the third quarter.
Meanwhile, the company is still struggling with its lead product, Copaxone. The product generated approximately $0.9 billion in worldwide sales in the second quarter of 2014. However, Teva has already switched 51% of Copaxone patients to the new formulation and expects to switch 65% of Copaxone patients to the new formulation by the end of 2014.
Meanwhile, cost-cutting initiatives at Teva should also boost the bottom line.
Last quarter, Teva had posted a positive earnings surprise of 0.82%. Also, the company had recorded positive earnings surprises in three of the last four quarters. In the trailing four quarters, the company recorded an average beat of 0.56%.
Other Stocks to Consider
Here is another company you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat this quarter:
AMAG Pharmaceuticals (AMAG) has an earnings ESP of +25.00% and carries a Zacks Rank #2 (Buy). It is scheduled to report its third-quarter results on Oct 30.
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