Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.
Let's turn to Teva Pharmaceutical (NYSE: TEVA ) . The drug company has a unique balance, profiting from generics on one hand yet having its own proprietary drugs on the other. Let's take an early look at what's been happening with Teva Pharmaceutical over the past quarter and what we're likely to see in its quarterly report on Thursday.
Stats on Teva Pharmaceutical
Analyst EPS Estimate | $1.33 |
Change from Year-Ago EPS | (16%) |
Revenue Estimate | $5.26 billion |
Change from Year-Ago Revenue | (7.4%) |
Earnings Beats in Past 4 Quarters | 3 |
Source: Yahoo! Finance.
Will Teva Pharmaceutical stay healthy?
Analysts have been pretty certain about their estimates for Teva Pharmaceutical in the just-concluded quarter, but over the past three months, they've pulled in their estimates for the first quarter and full-year 2013 sharply. The stock has been equally pessimistic, falling almost 8% since early November.
Teva is best known for its generic versions of off-patent drugs. Given how much less expensive generic versions are compared to their branded equivalents, health-care advocates argue that they're essential to keeping drug costs down, even though they also discourage innovation. Teva hasn't been content to stick with generics solely, though, also working on branded drugs. Its blockbuster drug is Copaxone, which is a treatment for multiple sclerosis.
For Copaxone, though, competition is on the horizon. Teva filed what's known as a citizen's petition with the FDA to try to delay approval of Biogen Idec's (NASDAQ: BIIB ) BG-12 treatment for MS, which will go up directly against Copaxone if approved.
Meanwhile, Teva is looking to for future growth from biosimilars, which currently represents an untapped market. Biologic drugs have been a promising area for branded-drug makers, and Teva is a player in that field, with its Tbo-filgrastim set to launch late this year to go up against Amgen's (NASDAQ: AMGN ) Neupogen. But if biosimilars -- essentially generic versions of biologics -- work as well as generic drugs have, then Teva could pioneer a whole new profit center.
In Teva's quarterly report, investors need to watch how the company plans to address the trend toward branded-drug makers marketing their own post-patent generic versions to retain sales. Pfizer (NYSE: PFE ) did that extremely well when Lipitor went off-patent, and if others follow suit, Teva needs a better plan than just cost savings to come out the competitive winner in the space.
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