FDA Rejection Cuts Off Teva Pharmaceutical Stock's Rally

The stock saw an impressive surge late last month

Digital Content Manager
Apr 20, 2022 at 9:44 AM
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The shares of Teva Pharmaceutical Industries Ltd (NYSE:TEVA) are down 3.3% at $9.84 this morning, following news that the U.S. Food and Drug Administration (FDA) sent a letter rejecting the company's marketing application for its schizophrenia treatment. Teva said it is now reviewing its next steps and plans on working closely with the FDA while going over their options. The treatment was created in partnership with French pharmaceutical developer MedinCell (MEDCL), whose stock is also taking a hit on the news. 

Despite today's drop, however, TEVA is still a relative outperformer on the charts. The stock has managed to add roughly 27% in 2022, though today's drop has it falling even further from recent pressure at its year-over-year breakeven. The stock recently broke above a former rejection level at the 320-day moving average after an opioid settlement helped it surge up the charts in mid-March, and this trendline could still serve as a floor going forward. 

Analysts have remained bearish on Teva stock, even after Bernstein changed its tune late last month. Of the 12 in coverage, 10 call it a "hold" or worse, compared to two "strong buy" ratings. Plus, the 12-month consensus price target of $10.81 is a slim 6.2% premium to last night's close. 

Sort-term options traders have been much more put-heavy than usual of late. This is per TEVA's Schaeffer's put/call open interest ratio (SOIR) of 0.87, which sits higher than 96% of readings from the past year. 

 

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