The Zacks Analyst Blog Highlights: Teva Pharmaceutical Industries, Novartis, Biogen Idec, Actavis and VimpelCom

Jan 30, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 30, 2014 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Teva Pharmaceutical Industries Limited (NYSE: TEVA-Free Report), Novartis (NYSE: NVS-Free Report), Biogen Idec (Nasdaq: BIIB-Free Report), Actavis (NYSE: ACT-Free Report) and VimpelCom Limited (Nasdaq: VIP-Free Report).


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Here are highlights from Wednesday's Analyst Blog:

FDA Nod for New Formula of Teva's Copaxone

Teva Pharmaceutical Industries Limited (NYSE: TEVA-Free Report) announced that a new dose of its multiple sclerosis (MS) drug, Copaxone (40mg/mL), has been approved by the U.S. Food and Drug Administration (FDA). The drug has been approved for relapsing forms of multiple sclerosis.

This dose of Copaxone allows three times a week subcutaneous administration as compared to the daily administration schedule for the currently available formulation (20 mg/mL). The lower frequency of administration will be more convenient for patients. The three-times-a-week Copaxone will be available within a few days.

New Copaxone Approval, a Major Positive

We view the approval of the new formulation of Copaxone as a major positive for the company. We expect Teva's shares to gain on the news.

Copaxone generated approximately $3.2 million in sales in the first nine months of 2013, accounting for more than 20% of the company's total revenues. However, Copaxone could start facing generics this year.

Last month, Teva provided guidance for 2014 based on two likely scenarios related to Copaxone – Copaxone remaining exclusive and Copaxone going generic. The entry of Copaxone generics this year could cut total revenues by about $500 million and earnings by 60 cents.

Teva has undertaken several initiatives (including developing new candidates targeting MS and the new formulation of Copaxone) to mitigate this loss. With MS candidate Nerventra receiving a negative opinion from the Committee for Medicinal Products for Human Use earlier this month, the FDA approval of the new Copaxone formulation comes as a relief.

Teva is planning to switch a significant number of patients (approximately up to 45%) from Copaxone 20 mg/mL to Copaxone 40 mg/mL in the next few months.

However, we remind investors that the competition in the MS market is intense. Apart from injectables, several oral therapies including Novartis' (NYSE: NVS-Free Report) Gilenya and Biogen Idec's (Nasdaq: BIIB-Free Report) Tecfidera are also available.

Teva carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks include Actavis (NYSE: ACT-Free Report) carrying a Zacks Rank #1 (Strong Buy).

VimpelCom Tumbles on Dividend Cut

Russian telecom giant VimpelCom Limited (Nasdaq: VIP-Free Report) slashed its annual dividend payout, which sent the stock price spiralling 12.81% in Tuesday trade on Nasdaq. We believe this unexpected news triggered the negative reactions from stockholders.

The Russian carrier recently announced that its supervisory board has approved an annual dividend of 3.5 cents per share, which is way below its previous guidance of 80 cents. The supervisory board even cancelled the final 2013 interim dividend of 45 cents per share − declared during the third quarter financial results.     

The wireless provider has been reeling under debt pressure owing to aggressive acquisition activity in Asia, Africa and Europe. Its net debt stood at a whopping $22.5 billion at the end of third quarter 2013. The dividend cut is aimed to restructure its leveraged position. However, it will significantly reduce its shareholders' wealth.      

VimpelCom, the third largest wireless operator behind Mobile TeleSystems and MegaFon, had 219 million subscribers at the end of third quarter 2013. However, both Mobile TeleSystems and MegaFon pay higher annual dividends, which make them better value stocks than VimpelCom.   

VimpelCom will continue with its new dividend policy until it manages to lower its net debt to EBITDA ratio to under 2x times. The company aims to cut the said ratio to 2.3 by the end of 2014.

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