Why Teva Pharmaceutical Fell Below $9.00

At the start of July, Teva (NYSE:TEVA) traded at just below $10.00. By the end of last week, the stock fell by 7.4% and closed at $8.61. Where is the bottom?

At below $9.00, TEVA is re-testing lows not seen since last September and November. Worries are rising that the Purdue bankruptcy plan will raise Teva’s litigation settlement costs higher. On July 8, Purdue Pharma reached an agreement with 15 states for its role in the opioid crisis. The states will drop their opposition to the bankruptcy reorganization plan. In return, the company will pay another $50 million, plus release millions of documents.

Previously, J&J (NYSE:JNJ) settled with New York State costing it $230 million. JNJ also agreed not to sell opioids. In that time, Endo (NASDAQ:ENDP) and Teva fell. Investors are already nervous about lofty stock markets. They closed their speculative value trades on ENDP and TEVA stock in the last month.

ENDP’s trial resumes later this month and could have frightening consequences. Endo could face liabilities that send it to bankruptcy. Teva has too much debt and little room for wider-than-expected legal settlements.