US HEALTHCARE: Teva: 3Q25 Earnings
Nov-05 14:55
(TEVA; Ba1/BB Pos/BB+)
Good Quarterly Results with Continued De-Leveraging. Slight Credit Positive
- 3Q25 revenues were up 3% y/y to $4.5bn due to higher revenues from Austedo (+38% y/y) as well as a 7% increase in generics/biosimilar revenues. Teva saw strong volume growth from Austedo while generics were boosted by strong biosimilar revenues from Revlimid, EpiPen and Rituxan.
- 3Q25 EBITDA increased 6% y/y to $1.3bn due to mix shift to more innovative products as well as Teva's continued cost reduction program ($700mm savings by '26).
- Teva updated FY25 guidance with revenues now expected at $16.8bn-$17.0bn (top-end reduced by $200mm) while adjusted EBITDA increased to $4.8bn-$5.0bn (from $4.7bn-$5.0bn).
- During 3Q25, Teva generated $233mm of FCF and reduced gross debt by ~$450mm. We still expect Teva to generate FY25 FCF of ~$1.4bn and expect this to improve to $1.8bn for FY26.
- Teva ended the quarter with gross leverage of 3.7x (3.2x net) and we see leverage ending FY25 at ~3.5x. The rating agencies add ~0.3x of leverage for various legal settlements so adjusted leverage for FY25 will likely end slightly below 4.0x. Management reiterated their FY27 net leverage target of 2.0x (which doesn't include legal liabilities).
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GBP: GBPUSD Aided Toward Friday High on NY AM Dollar Weakness
Oct-06 14:41
The USD's NY morning fade has aided EURUSD and GBPUSD well off earlier lows, helping EURUSD almost entirely erase the PM resignation losses. EURGBP still trades heavy, however, meaning GBPUSD's rally has the price within range of the Friday high at 1.3486.
- BoE's Bailey is set to speak later today at 1600BST. It's unclear whether he'll comment directly on monetary policy (he's appearing at Scotland’s Global Investment Summit 2025) - but markets remain strongly of the view that additional BoE easing this year is unlikely (6bps of rate cuts currently priced through year-end).
- That said, it's fiscal and political risk that's likely a more primary GBP driver for the rest of this year - The front-end of the GBP vol curve provide a further signal for market concern over the Autumn Budget. The flatter front-end of the curve and the building premium for 2m implied vols shows markets building a risk premium into the event.
- This effect is particularly evident in EUR/GBP, for which markets continue to favour as a GBP weakness play given the unpredictability of the USD into year-end.
- We see GBP's driver as the fiscal policy mix ahead. The Gilt curve and, in particular, the longer-end has regained a sense of stability after being marked sharply higher at the beginning of September. How valid and long-lasting this proves to be should determine GBP/USD's ability to trade within range of 1.3525 (50% mid-Sept downleg) and make meaningful headway toward the bull trigger of the July 1st high at 1.3789.
BOE: Bailey text due for release at 16:00BST / 11:00CET
Oct-06 14:40
- Governor Bailey is due to speak today to deliver the keynote speech at Scotland’s Global Investment Summit 2025. The text will be released at 16:00BST here.
- There is no title attached to the speech and it is therefore unknown at this point whether Bailey will be discussing anything relevant for monetary policy.
- With speeches from both Deputy Governors Breeden and Ramsden last week leaning to the dovish side (neither ruled out voting for a November cut) and with Dhingra and Taylor voting for a sequential cut in September, Governor Bailey's position as the swing voter has been further cemented in our view.
- Therefore anything he says on monetary policy could be market moving, particularly anything on the dovish side given current market pricing (with only 1bp priced for a November cut and 5bp priced by year-end).
EURIBOR OPTIONS: Call Condor Buyer
Oct-06 14:23
ERM6 98.50/98.625/98.75/98.875c condor, bought for half in 10k (ref 98.07).
