Teva Pharmaceutical Industries Ltd. (TEVA) is driving the best start of the year for Israeli stocks since 1997 as the drugmaker soothed concerns about new revenue sources by replacing its chief executive officer.
Israel’s benchmark TA-25 Index (TA-25) climbed 3.1 percent to 1,119.50 in the first month of 2012, the biggest January gain in 15 years, after tumbling the most in eight months in January 2011 as uprisings throughout the Middle East deterred investors. The gauge rose 0.3 percent to 1,123.16 at the 4:30 p.m. close in Tel Aviv today. The Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York rose 9.3 percent last month, as Teva, the world’s largest maker of generic drugs, surged 12 percent in New York, the biggest monthly gain since 2007.
Stocks are rebounding from declines in 2011 as signs of progress in Europe’s debt crisis boost the outlook for one of Israel’s biggest trading partners. Teva said on Jan. 2 that Jeremy Levin, formerly of drugmaker Bristol-Myers Squibb Co. (BMY), will replace Shlomo Yanai as chief executive after U.S.-traded shares plunged 23 percent last year, the most since 2006.
“Teva has had a nice run since the announcement of a new CEO and the outperformance has helped the index,” Jonathan Kreizman, an analyst at Clal Finance Brokerage Ltd. said in an interview from Tel Aviv yesterday. “The Israeli market was hit hard last year by the uprising in Egypt.”
Teva shares rose 0.8 percent to 170 shekels in Tel Aviv today. The Bloomberg Israel-US Index (ISRA25BN) is outperforming the 4.4 percent gain in the Standard & Poor’s 500 Index this year, and the Nasdaq Composite Index (CCMP)’s 8 percent rise.
Levin, formerly senior vice president for strategy at Bristol-Myers Squibb, may help Petach Tikva, Israel-based Teva find new sources of revenue to replace sales lost as the company’s best-selling medicine, the multiple sclerosis treatment Copaxone, faces increased competition, according to Kreizman.
Investors are concerned that competing drugmakers will erode the company’s market share as the patent for Copaxone expires in two years. Sales of the treatment, which accounted for 24 percent of Teva’s revenue in the third quarter, will probably peak this year at $3.8 billion, the company said on Dec. 21. Sales were $3.32 billion in 2010.
Bristol-Myers made 17 acquisitions over four years with Levin, the former senior vice president of strategy, alliances and transactions, including the 2009 purchase of Medarex Inc., which saw the company gain the Yervoy skin cancer drug.
Prolor Biotech Inc. (PBTH), which is 21 percent owned by Teva’s Chairman Philip Frost, led gains on the Bloomberg Israel-US Index in January with a 45 percent surge. Shares dropped 34 percent last year. Prolor rose 0.5 percent to 23.14 shekels in Tel Aviv today.
The Nes Ziona, Israel-based developer of proteins may be an acquisition target for Teva, as Levin looks to boost the company’s branded drugs portfolio, said Raghuram Selvaraju, an equity analyst at Morgan Joseph TriArtisan Group.
“Levin’s background will enable Teva to buy companies like Prolor that would fold particularly well with the company,” Selvaraju said.
MagicJack VocalTec Ltd. (CALL), the Israeli company whose founders invented the technology used to make phone calls over the Internet, was the second-biggest gainer on the index last month, increasing 41 percent.
The company was rated “outperform” in initial coverage by Oppenheimer & Co.
“We expect MagicJack to further expand its range of devices and services and to see sustained revenue and earnings- per-share growth” of more than 20 percent a year, Timothy Horan, an analyst at Oppenheimer in New York, wrote in an e- mailed report dated Jan. 30.
Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.
International Business Machines Corp. (IBM), the world’s biggest computer-services provider, said yesterday that it’s acquiring Worklight Inc., the provider of a mobile application platform for smartphones and tablets whose research and development is based in Shefayim, Israel.
The announcement comes three weeks after Apple Inc. (AAPL) said that it acquired Anobit Technologies Ltd., an Israeli company that makes flash-memory drive parts for the iPhone and iPad.
CEVA Inc. (CEVA), a developer of the chips used in smartphones and tablets with most of its operations in Israel, sank 3.8 percent to $27.01 yesterday, extending its decline in the month to 11 percent.
The company told analysts on a conference call that it expects first-quarter earnings-per-share of 20 cents to 22 cents, below the 24-cent median estimate of 11 analysts surveyed by Bloomberg.
“The company reported weak guidance for the year,” Andrew Uerkwitz, an analyst at Oppenheimer in New York, said by phone. “Investors wanted to see more than that.”
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