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Teva Pharmaceutical Industries Limited’s (TEVA - Free Report) stock has declined 10% in a month despite strong third-quarter results announced earlier this month. The company beat estimates for earnings as well as sales. The company also slightly raised its earnings and sales guidance. The stock probably declined as investors were not impressed with the guidance increase. However, some analysts believe the stock’s decline after the results was an overreaction.
Teva is the world’s largest generic drug company in terms of both total and new prescriptions. The company also markets some branded drugs. Let's discuss the company’s strengths and weaknesses in detail to understand whether the stock’s recent price decline should be used as a buying opportunity for long-term investors.
TEVA’s New Branded Drugs Driving Growth
The company is seeing continued market share growth of its two newest drugs, Austedo and Ajovy. Though Teva is seeing slower growth of Ajovy in the U.S. market, it expects sales to benefit from continued patient growth and launches in additional countries in Europe and international markets. In 2024, Teva expects Ajovy sales to be approximately $500 million.
For Austedo, Teva expects to achieve annual revenues of more than $2.5 billion by 2027. The Austedo franchise got a boost from the launch of Austedo XR, a new once-daily formulation of Austedo. Teva expects to launch Austedo in European markets in 2026. In 2024, Teva expects Austedo sales to be approximately $1.6 billion.
Uzedy (risperidone) extended-release injectable suspension, a long-acting subcutaneous atypical antipsychotic injection for the treatment of schizophrenia in adults, was launched in May 2023 in the United States. On the third-quarter conference call, Teva raised the revenue guidance for Uzedy from approximately $80 million to approximately $100 million, reflecting growing demand for the product.
Teva has also made decent progress with its branded pipeline, which includes olanzapine, a long-acting subcutaneous injectable (LAI) in late-stage development for treating schizophrenia and TEV-48574, its anti-TL1A therapy in mid-stage development for inflammatory bowel diseases (“IBD”), ulcerative colitis and Crohn’s disease. Teva has partnered with Sanofi (SNY - Free Report) for its TEV-4857 to maximize the value of the asset. Teva and Sanofi will equally share the development costs globally. Top-line data from a phase IIb study on TEV-48574 is expected by the end of this year.
TEVA’s Strengthening Generics and Biosimilar Pipeline
Teva regularly seeks first-to-file (FTF) and first-to-market opportunities as well as approval for complex generics, which are likely to face less competition. Teva saw limited new complex generic approvals in the 2021-2023 period. However, Teva has launched several complex generic products in 2024 and expects to launch some more in 2025. This should help the company maintain its strong position in the global generics market.
Teva has a decent pipeline of biosimilars, with some being developed in partnership with Alvotech. A biosimilar version of AbbVie’s (ABBV - Free Report) Humira called Simlandi was approved in February 2024 and launched in May. Selarsdi, a biosimilar version of J&J’s (JNJ - Free Report) Stelara, was approved in April 2024, and per a settlement with J&J, Teva will launch the biosimilar in February 2025. In October 2024, Teva launched the first generic version of Novartis’ Sandostatin LAR. While a biosimilar version of Amgen’s Prolia is under review in the United States and EU, biosimilars of Eylea, Simponi, Xgeva and Xolair are in late-stage development. Teva expects to launch six biosimilars by 2027.
Teva’s U.S. generics/biosimilars business looks stable now, much more than it has been in years. Teva expects continued growth in its U.S. generics business in 2025, driven by complex generic product launches like Novo Nordisk’s Victoza, Lilly’s Forteo and others, as well as upcoming launches of generic versions of Symbicort and Saxenda and biosimilars Simlandi and Selarsdi.
TEVA Resolves Opioid Litigation
Teva faces several lawsuits with cities, states and Native American tribes, which claim that it was one of the several companies whose opioid-based drugs were responsible for fueling the nationwide opioid epidemic.
In June 2023, Teva announced that it had fully resolved its nationwide settlement agreement related to opioid claims brought by all 50 U.S. states and more than 99% of the litigating subdivisions and special districts. As part of the settlement, Teva will pay up to $4.25 billion (including the already settled cases), spread over 13 years, including deliveries of up to $1.2 billion of its generic version of Narcan. In September 2024, Teva reached an agreement with the City of Baltimore to settle its opioid-related claims for a total of $80 million, thus settling with 100% of the litigating subdivisions and special districts. The settlement amount was, however, more than Teva’s initial expectations to pay around $2.6 billion to settle the lawsuits.
Teva’s stock has risen 58.7% so far this year compared with an increase of 10.7% for the industry. The stock has also outperformed the sector and the S&P 500, as seen in the chart below. In fact, Teva’s stock price is showing improvement after years of remaining suppressed.
TEVA Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
TEVA’s stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, the company shares currently trade at 6.10 on a forward 12-month basis, lower than 9.43 for the industry.
TEVA Stock Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for earnings has remained stable at $2.44 per share for 2024 but slightly declined from $2.76 to $2.75 per share for 2025 over the past 30 days.
TEVA’s Estimate Movement
Image Source: Zacks Investment Research
Stay Invested in Teva’s Stock
Teva’s revenues suffered significantly since it lost exclusivity for key multiple sclerosis medicine, Copaxone, in 2015. Teva also faces competitive pressure for some of its key branded drugs. It also has a high debt load and faces some price-fixing charges. However, its newer drugs, Austedo, Uzedy and Ajovy, and stable generics business are reviving top-line growth.
With the nationwide settlement for the costly opioid litigations, new product launches, stability of the generics segment with contribution from biosimilars, and a robust biosimilar and branded pipeline, the path for Teva’s long-term growth is becoming clearer. Teva is saving costs and improving margins through the optimization of operations for efficiency while also lowering the debt on its balance sheet.
Teva’s reasonable valuation, an improving pipeline and the prospect of growth in sales and profits are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Using the recent price dip to buy the stock can prove prudent for long-term investors.
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Image: Bigstock
TEVA Stock Down 10% in a Month: Should You Buy the Dip?
Key Takeaways
Teva Pharmaceutical Industries Limited’s (TEVA - Free Report) stock has declined 10% in a month despite strong third-quarter results announced earlier this month. The company beat estimates for earnings as well as sales. The company also slightly raised its earnings and sales guidance. The stock probably declined as investors were not impressed with the guidance increase. However, some analysts believe the stock’s decline after the results was an overreaction.
Teva is the world’s largest generic drug company in terms of both total and new prescriptions. The company also markets some branded drugs. Let's discuss the company’s strengths and weaknesses in detail to understand whether the stock’s recent price decline should be used as a buying opportunity for long-term investors.
TEVA’s New Branded Drugs Driving Growth
The company is seeing continued market share growth of its two newest drugs, Austedo and Ajovy. Though Teva is seeing slower growth of Ajovy in the U.S. market, it expects sales to benefit from continued patient growth and launches in additional countries in Europe and international markets. In 2024, Teva expects Ajovy sales to be approximately $500 million.
For Austedo, Teva expects to achieve annual revenues of more than $2.5 billion by 2027. The Austedo franchise got a boost from the launch of Austedo XR, a new once-daily formulation of Austedo. Teva expects to launch Austedo in European markets in 2026. In 2024, Teva expects Austedo sales to be approximately $1.6 billion.
Uzedy (risperidone) extended-release injectable suspension, a long-acting subcutaneous atypical antipsychotic injection for the treatment of schizophrenia in adults, was launched in May 2023 in the United States. On the third-quarter conference call, Teva raised the revenue guidance for Uzedy from approximately $80 million to approximately $100 million, reflecting growing demand for the product.
Teva has also made decent progress with its branded pipeline, which includes olanzapine, a long-acting subcutaneous injectable (LAI) in late-stage development for treating schizophrenia and TEV-48574, its anti-TL1A therapy in mid-stage development for inflammatory bowel diseases (“IBD”), ulcerative colitis and Crohn’s disease. Teva has partnered with Sanofi (SNY - Free Report) for its TEV-4857 to maximize the value of the asset. Teva and Sanofi will equally share the development costs globally. Top-line data from a phase IIb study on TEV-48574 is expected by the end of this year.
TEVA’s Strengthening Generics and Biosimilar Pipeline
Teva regularly seeks first-to-file (FTF) and first-to-market opportunities as well as approval for complex generics, which are likely to face less competition. Teva saw limited new complex generic approvals in the 2021-2023 period. However, Teva has launched several complex generic products in 2024 and expects to launch some more in 2025. This should help the company maintain its strong position in the global generics market.
Teva has a decent pipeline of biosimilars, with some being developed in partnership with Alvotech. A biosimilar version of AbbVie’s (ABBV - Free Report) Humira called Simlandi was approved in February 2024 and launched in May. Selarsdi, a biosimilar version of J&J’s (JNJ - Free Report) Stelara, was approved in April 2024, and per a settlement with J&J, Teva will launch the biosimilar in February 2025. In October 2024, Teva launched the first generic version of Novartis’ Sandostatin LAR. While a biosimilar version of Amgen’s Prolia is under review in the United States and EU, biosimilars of Eylea, Simponi, Xgeva and Xolair are in late-stage development. Teva expects to launch six biosimilars by 2027.
Teva’s U.S. generics/biosimilars business looks stable now, much more than it has been in years. Teva expects continued growth in its U.S. generics business in 2025, driven by complex generic product launches like Novo Nordisk’s Victoza, Lilly’s Forteo and others, as well as upcoming launches of generic versions of Symbicort and Saxenda and biosimilars Simlandi and Selarsdi.
TEVA Resolves Opioid Litigation
Teva faces several lawsuits with cities, states and Native American tribes, which claim that it was one of the several companies whose opioid-based drugs were responsible for fueling the nationwide opioid epidemic.
In June 2023, Teva announced that it had fully resolved its nationwide settlement agreement related to opioid claims brought by all 50 U.S. states and more than 99% of the litigating subdivisions and special districts. As part of the settlement, Teva will pay up to $4.25 billion (including the already settled cases), spread over 13 years, including deliveries of up to $1.2 billion of its generic version of Narcan. In September 2024, Teva reached an agreement with the City of Baltimore to settle its opioid-related claims for a total of $80 million, thus settling with 100% of the litigating subdivisions and special districts. The settlement amount was, however, more than Teva’s initial expectations to pay around $2.6 billion to settle the lawsuits.
TEVA’s Price Rise, Attractive Valuation & Estimate Discussion
Teva’s stock has risen 58.7% so far this year compared with an increase of 10.7% for the industry. The stock has also outperformed the sector and the S&P 500, as seen in the chart below. In fact, Teva’s stock price is showing improvement after years of remaining suppressed.
TEVA Stock Outperforms Industry, Sector & S&P 500
TEVA’s stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, the company shares currently trade at 6.10 on a forward 12-month basis, lower than 9.43 for the industry.
TEVA Stock Valuation
The Zacks Consensus Estimate for earnings has remained stable at $2.44 per share for 2024 but slightly declined from $2.76 to $2.75 per share for 2025 over the past 30 days.
TEVA’s Estimate Movement
Stay Invested in Teva’s Stock
Teva’s revenues suffered significantly since it lost exclusivity for key multiple sclerosis medicine, Copaxone, in 2015. Teva also faces competitive pressure for some of its key branded drugs. It also has a high debt load and faces some price-fixing charges. However, its newer drugs, Austedo, Uzedy and Ajovy, and stable generics business are reviving top-line growth.
With the nationwide settlement for the costly opioid litigations, new product launches, stability of the generics segment with contribution from biosimilars, and a robust biosimilar and branded pipeline, the path for Teva’s long-term growth is becoming clearer. Teva is saving costs and improving margins through the optimization of operations for efficiency while also lowering the debt on its balance sheet.
Teva’s reasonable valuation, an improving pipeline and the prospect of growth in sales and profits are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Using the recent price dip to buy the stock can prove prudent for long-term investors.