For Teva Pharmaceutical, generic is designer chic

Analysts see a 13-16% revenue gain for Teva in 2008, on top of a solid 9-11% in 2007. Analysts also see 25-30 new generic launches in 2008 for Teva, which is also Israel's top drugmaker. The Reuters fiscal year (FY) 2007/F2008 earnings per share (EPS) consensus estimates for TEVA are $2.35 to $2.66.

Further, Teva's defensive status stems from the U.S. market's effort to limit drug spending increases: a considerable portion of health care cost increases could be eliminated via drug cost containment - - and generic drugs will help both public and private officials achieve this goal. Moreover, look for other developed world countries to seek to limit drug spending increases as well, in the decade ahead.

The risks? Analysts are watchful for intensifying competition, and unfavorable regulation changes that might hamper Teva's ability to sell its products.

The First Call mean rating for TEVA is: Buy [26 firms]. Mean 2008 target: $50.00 [high: $55, low: $46].

Stock Analysis: Teva Pharmaceutical is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from TEVA's shares. Sell/Stop Loss if you were to purchase shares in this company: $27.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.