Teva Is In Dire Straits
The launch of generic Copaxone this quarter could punish the company; it gets about 45%-50% of its EBITDA from Copaxone. Its $35 billion debt load exceeds 5x and $17 to $19 billion in principal payments are expected to come due over the next three years. Teva only generates $2.3 billion in annual free cash flow, and will could fall further once generic Copaxone arrives. The company cannot afford any disruption in sales or its operations, yet it has promised investors and analysts $3 billion in cost cuts. It if backtracks on those promises it could punish the stock.
It striking workers cause any disruption to operating activities it could hamper the company’s ability to restructure its cascading principal payments. It could also lead to a ratings downgrade by Moody’s or S&P, drive up interest costs and further dampen cash flow. There are likely no winners here. Even if Teva follows through on cost-cutting efforts a loss of employee morale, and a continued price erosion in generics could still lay ahead.
On Trump And The Global
The second installment of Trump And The Global Economy Town Hall took place October 24th in Fort Greene. It Featured Professor Lance Brofman, Coconut Rob (Coconut Rob Smoothies), Wuyi Jacobs (AfroBeats Radio) and Ralph Baker, author of Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead.
The event was well-received by the community. We parsed through President Trump’s proposed tax plan and [i] how it was pure economic folly and [ii] high net worth individuals could potentially game the system by shifting income around. Apparently, Kansas Coach Bill Self did this when the state of Kansas cut taxes in the past. We discussed the pros and cons of technology on workers and the economy. How will the economy and country prosper under Trump’s leadership vis-a-vis Obama? What’s behind the verbal sparring with black athletes, ESPN’s Jemele Hill and North Korea’s Kim Jong Un?
