Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) final week printed its second quarter monetary outcomes wherein it offered decrease income however greater revenue than predicted by the analysts – $4.2 billion and $0.66 per share respectively. Teva additionally raised gross sales steerage for branded medication and annual revenue steerage. On the day the report was printed, Teva’s share worth rose 1.8% on Wall Road however within the following days fell 8.6%. This morning Teva is down 4.74% on the Tel Aviv Inventory Alternate (TASE).
For the reason that begin of 2025, Teva has underperformed in comparison with different main firms within the sector. For the reason that begin of the 12 months the corporate’s share worth has fallen 30.2% in contrast with a mean fall of 4.8% within the S&P well being care sector indices. The newest fall comes after an outstanding 12 months for Teva in 2024, wherein it doubled its worth. At this time, after current declines, the corporate’s inventory has a market cap of $9 billion.
In line with “The Wall Road Journal,” the common goal worth of 11 funding establishments overlaying Teva’s inventory is $24.29, a 57.9% premium on the present share worth, and virtually all of them have constructive suggestions for the inventory.
Oppenheimer: “Glorious shopping for alternative”
One of many funding banks whose worth goal for Teva’s inventory is among the many highest is Oppenheimer with a worth goal of $30, 95.1% greater than the worth on the NYSE. Oppenheimer’s suggestion for Teva is “outperform.”
Oppenheimer writes, “In our opinion, the present market worth of Teva’s inventory doesn’t mirror its future earnings potential, and constitutes a superb shopping for alternative for long-term buyers.”
Oppenheimer provides, “Teva reported glorious outcomes for the second quarter of the 12 months and affirmed its strategic goals for 2027.” Teva’s goals for 2027 embrace a non-GAAP working margin of 30%. In Might Teva reported shedding 8% of its workforce – about 3,000 workers by 2027 – to be able to save $700 million. The corporate’s CEO Richard Francis mentioned after publication of the outcomes final week that there’s fast progress within the plan, which is already producing annual financial savings for the corporate of $140 million in 2025.
Oppenheimer notes that reaching the 2027 goals wants important development in gross sales of branded medication, operational effectivity and better revenue margins from branded medication, which can permit creation of sturdy free money circulate. Of their evaluation, Teva will be capable of obtain the goals sooner than anticipated. In line with the Oppenheimer analysts, the drug Duvakitug, which is being developed along with Sanofi for gastrointestinal infections, is anticipated to start part 3 medical trials within the fourth quarter, thus making Teva eligible for a fee of $500 million from Sanofi. Of their evaluation, the drug will probably be of equal significance to Copaxone sooner or later and should even overtake it in income within the far future.
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The sale of Teva’s energetic substances division will release capital. Administration mentioned {that a} closing choice will probably be made throughout the present quarter, and Oppenheimer estimates that its worth will probably be $1.5-2 billion. “The US authorities locations particular emphasis on the sustainability of provide chains, and due to this fact that is prone to have a constructive impression on the worth that Teva is ready to demand within the deal.”
Can rise by tens of %?
Not solely Oppenheimer believes within the Israeli pharmaceutical large. A current “Globes” survey of 14 institutional buyers within the Israeli capital market discovered that a lot of them believed Teva’s inventory is undervalued. For instance, Migdal famous that it “at present trades at a 6.5-fold earnings a number of. Our assumption is that as confidence in income and revenue ranges within the coming years will increase, the corporate will start to commerce at an earnings a number of that’s extra much like moral firms (branded drug producers), which might end in a share worth of $23-27.” That is whereas the inventory is at present buying and selling at a worth that’s over 50% decrease.
Migdal believes that Teva is heading in the right direction to get there, after over the previous decade, “Succeeding in lowering debt 60%, considerably reducing bills, bettering manufacturing effectivity and making a broader income combine, with a wide range of new branded medication. As well as, the corporate has constructed a powerful branded drug pipeline that’s anticipated to supply it with a development engine within the coming years.”
On the identical time, Shmuel Ben-Arie, CIO at Pioneer Capital Administration, additionally estimated final week in an interview with Globes that Teva is buying and selling at a comparatively low money circulate a number of, “and will simply rise 30%-40% within the coming 12 months.”
Printed by Globes, Israel enterprise information – en.globes.co.il – on August 4, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
