Jalaa Marey | AFP | Getty Images
Israeli employees of Teva, the earth’s biggest maker of generic drugs, protest outside the pharmaceutical company’s plant in Kiryat Shmona, in northern Israel, on December 14, 2017.
The disastrous year for Teva Pharmaceutical shareholders will improve in 2018, according to one top Wall Street firm.
Goldman Sachs raised its rating to buy coming from neutral for the generic drugmaker, citing the company’s aggressive cost-cutting targets for the next two years.
The call sent the stock up 4 percent during Friday’s premarket session.
“TEVA has turned a corner on December 14, with its announced $3bn of cost cuts by 2019 coming in well ahead of our expectation of $1-2bn by 2020,” analyst Jami Rubin wrote in a note to clients Friday. “While we acknowledge there is usually skepticism on the path forward … we believe we are inside the early innings of a credible turnaround led by a competent management team.”
The company announced Thursday the item plans to lay off 14,000 employees or 25 percent of its workforce as a part of its restructuring plan over the next two years.
The analyst increased her 12-month cost target for Teva shares to $20 coming from $15, representing 16 percent upside to Thursday’s close. Teva shares surged 10 percent on Thursday after announcing the cost-saving targets as well as layoffs.
Teva shares are underperforming the market that will year. Through Thursday, its stock is usually down 52 percent in 2017 versus the S&P 500’s 18.5 percent return. The company repeatedly disappointed Wall Street with lower-than-expected financial guidance as well as weak results earlier that will year.
Rubin expressed confidence Teva’s completely new CEO, Kare Schultz, who joined in November, will deliver on the cost-cutting projections. The executive has “repeatedly understated as well as over-delivered” at his previous job at Lundbeck, Rubin said.
— CNBC’s Michael Bloom contributed to that will story.