Teva (NYSE:TEVA) continues to trade at a discount because of its Cephalon unit. The opioid crisis is still a headwind hurting the stock.
On Aug. 18, New York Governor Andrew Cuomo announced the DFS (Department of Financial Services) was suing Teva and Allergan in connection to the opioid crisis. Cephalon sold opioids in New York between 2006-2014. Teva is already getting sued for getting kickbacks for selling Copaxone.
Teva will fight to maintain its innocence. If it settles, the fine will hurt its cash flow. And Teva needs that cash badly to pay down its debt. Value investors who waited for TEVA stock to dip below $10 should look at the company again.
Bausch Health (NYSE:BHC) popped, to as high as over $20, after posting quarterly results. At the time, the CEO announced it would spin off B+L. The timing of the announcement failed to stop the stock sell-off. Q2 EPS of 42 cents (non-GAAP) missed estimates by 23 cents. BHC lost 92 cents a share (GAAP) as revenue fell 22.8% Y/Y to $1.66 billion.
The B+L split will take 12-18 months at the very least. Few details are troubling, and a sum of the parts valuation may not lead to capital gains for investors. For example, Alcon (NYSE:ALC) stock "topped" at $65 from June – August. If ALC stock falls, the B+L valuation would fall, too.
