Teva Pharmaceutical Industries, based in Israel, is the leading generic drug manufacturer in the world. Teva derives half of its sales from North America and makes up a high-single-digit percentage of the total number of generic prescriptions in the US. It also has a significant presence in Europe, Japan, Russia, and Israel. Besides generics, Teva has a portfolio of innovative medicines and biosimilars in three main therapeutic areas: central nervous system with Copaxone, Ajovy, and Austedo; respiratory with Qvar and ProAir; and oncology with Truxima, Herzuma, and Bendeka/Treanda. Teva also sells active pharmaceutical ingredients, offers contract manufacturing services, and owns Anda, a US-based generic and specialty drug distributor.

When management at a company raises guidance, it can be a catalyst for market-beating returns in the quarters ahead. The second-quarter earnings season is wrapping up, with blended earnings (actual results and the consensus for those still to report) showing a year-over-year gain of 12%, according to Refinitiv. That is considerably better than what was expected at the start of the earnings period. Leading the outperformance are strong gains in Financial, with earnings up 20%. On the flipside, Materials is performing the worst, down 6%. Our analysts are always on the lookout for companies that boost their outlooks during earnings season. Here is a partial list of BUY-rated companies in Argus' Fundamental Universe of Coverage at which management raised guidance or increased its outlook during the 2Q24 EPS reporting season. We like this theme, as it crosses numerous industries and generates a robust list of potential portfolio candidates.

Two important inflation reports were released this week. Both indicated that overall pricing pressures have retreated from peaks in 2022. But both also confirmed that inflation remains above the Fed's 2% target and indicated that progress to that level may be hard to achieve in the months ahead. Let's first take a deeper dive into the Consumer Price Index. There were some positive results here. According to the latest CPI report, the overall inflation rate in July of 2.9% was lower than the prior month's rate of 3.0%. That good news was supported by a low reading in the monthly core CPI rate. Core CPI excludes the impact of food and energy and rose 0.2% from June to July, consistent with subdued readings for the past quarter. What's propping up that core CPI, which on an annual basis has risen at a 3.2% rate? Transportation Services (+8.8% YOY) and Shelter (+5.1%). These elements of the index have stickier prices that don't typically fall sharply. In contrast, prices for Gasoline and New and Used Cars are actually lower year over year. The other inflation report was the Producer Price Index, which measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a decline in the rate of inflation. The PPI final demand annual rate through July was 2.2%, compared to 2.6% in June. The June 2022 CPI rate marked the peak reading for the index this cycle, and we expect pricing pressures to continue to ease as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed lifted the feds fund rate from 0.0% to above 5.25% over the past 24 months, and the rate hikes appear to be reducing inflationary pressures. We look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as their concern shifts toward economic growth.

Argus has published its latest Portfolio Selector, which features its popular Focus List. Each month, Director of Research Jim Kelleher, CFA, surveys the team of Argus Research industry analysts for their timeliest recommendations out of the company's fundamental universe of approximately 500 stocks. The Focus List typically includes 30 stocks: turnover is high, as Jim typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.