Teva Pharmaceutical Industries Limited (TEVA) shares rose more than 6% during Monday's session after Oppenheimer upgraded the stock and issued a price target of $12.00 per share. After Teva stock reached a 52-week low of $8.35 per share, the price target reflects a premium of nearly 44% to the low and a premium of more than 30% to the current market price. The stock remains well off of its 52-week high of about $26.00 following potential legal liability surrounding price-fixing and opioid epidemic areas in the United States.
Analyst Esther Rajavelu upgraded Teva stock from Perform to Outperform, although she lowered her price target from $17.00 to $12.00. With Teva shares trading at a 19-year low, the analyst believes that the stock could be a buying opportunity given that business fundamentals continue to improve. According to the Oppenheimer analyst, Teva's opioid exposure could be between $500 million and $700 million, and its price-fixing exposure could be significantly higher, but the company's balance sheet could sustain $400 million in average annual penalties over time.
From a technical standpoint, the stock remains in a significant bearish downtrend after breaking lower early last month. The relative strength index (RSI) remains in oversold territory with a reading of 23.89, but the moving average convergence divergence (MACD) remains in a free-fall. These indicators suggest that the stock could see some reprieve in the near term, but the intermediate- and long-term trends remain bearish.
Traders should watch for some consolidation above the 4.618 Fibonacci retracement level at around $8.00 over the coming sessions. If the stock moves higher, traders could see a retest of reaction highs around the 2.618 Fibonacci retracement level at around $11.33. If the stock breaks down lower, traders could see fresh 52-week lows near S1 support at $6.19.
The author holds no position in the stock(s) mentioned except through passively managed index funds.