Does Teva Pharmaceutical Deserve a Place in Your 2022 Portfolio?

NYSE: TEVA | Teva Pharmaceutical Industries Ltd. ADR News, Ratings, and Charts

TEVA – Israel-based Teva Pharmaceutical (TEVA) is conducting trials regarding the use of opioids. But is it wise to bet on the stock now based on its sound fundamentals? Read on, let’s find out.

Tel Aviv, Israel-based Teva Pharmaceutical Industries Limited (TEVA) is a leading generic pharmaceutical manufacturer with a portfolio of some 3,500 products. But the company has been linked with several controversies. For instance, on Dec. 30, 2021, a suburban New York jury ruled that TEVA contributed to the opioid crisis and was a public nuisance. TEVA responded that it “will prepare for a swift appeal as well as continue to pursue a mistrial.” The company was previously vindicated in a similar trial in California.

The stock has gained 13.4% in price year-to-date and 8.9% over the past month to close yesterday’s trading session at $9.08. 

TEVA’s third-quarter results were driven by the robust performance of AJOVY in the U.S., Europe, and Japan, and U.S. sales of AUSTEDO. Also, it reduced its net debt to $2.17 billion. So, its near-term prospects look promising.

Here is what could influence TEVA’s performance in the near term:

Consistent Product and Services Innovation

On Dec. 22, 2021, TEVA announced the launch of a first-to-market generic version of Narcan1 in the United States. The company launched an authorized generic of Epiduo1 Forte Gel on Dec. 1, 2021, to treat acne vulgaris. Also, in Oct. 2021, TEVA and MODAG GmbH formed a strategic collaboration on the exclusive worldwide licensing and development of MODAG’s lead compound, anle138b, and a related compound, sery433.

Solid Financials

TEVA’s net revenues decreased 2.3% year-over-year to $3.89 billion for the third quarter, ended Sept. 30, 2021. However, its operating income came in at $623 million, compared to a loss of $4.34 billion in the prior-year quarter. Its net income was $292 million compared to a $4.35 billion loss in the year-ago period, while its EPS was $0.26, compared to a $3.97 loss per share in the prior-year period. Also, its FCF increased 57.1% year-over-year to $795 million.

Discounted Valuation

In terms of forward non-GAAP P/E, TEVA’s 3.58x is 83.4% lower than the 21.51x industry average. And the stock’s 0.80x forward non-GAAP PEG is 58.2% lower than the 1.92x industry average. Furthermore, its 2.03x, 6.76x, and 0.62x respective forward EV/S, EV/EBITDA, and P/Sare lower than the 5.53x, 15.56x, and 6.51x industry averages. 

POWR Ratings Reflect Rosy Prospects

TEVA has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight distinct categories. TEVA has an A grade for Value, which is in sync with its lower-than-industry valuation ratios.

The stock has a B grade for Growth, which is consistent with analysts’ expectations that its EPS will increase 7.4% year-over-year to $0.73 for the quarter ended Dec. 31, 2021. Also, its EPS is expected to grow at a 3.9% rate per annum over the next five years.

TEVA is ranked #32 of 190 stocks in the Medical – Pharmaceuticals industry. Click here to see the additional POWR Ratings for TEVA (Momentum, Stability, Sentiment, and Quality).

Bottom Line

Even though TEVA is involved in some controversies, it has achieved several positive developments. It possesses sound fundamentals and high profitability. In addition, Wall Street analysts expect the stock to hit $10.50 in the near term, which indicates a potential 15.6% upside. So, we think it could be wise to bet on the stock now.

How Does Teva Pharmaceutical (TEVA) Stack Up Against its Peers?

While TEVA has an overall POWR Rating of B, one might also want to consider investing in its A-rated (Strong Buy) industry peers: GlaxoSmithKline plc (GSK), Merck & Co., Inc. (MRK), and Johnson & Johnson (JNJ).

Click here to checkout our Healthcare Sector Report

TEVA shares were unchanged in premarket trading Wednesday. Year-to-date, TEVA has gained 13.36%, versus a -1.10% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
TEVAGet RatingGet RatingGet Rating
GSKGet RatingGet RatingGet Rating
MRKGet RatingGet RatingGet Rating
JNJGet RatingGet RatingGet Rating

Most Popular Stories on

:  |  News, Ratings, and Charts

Bear Market Game Plan Revealed!

The bear market has been firmly in place all year long. Just some folks didn’t get the memo til 6/13 when the S&P 500 (SPY) finally broke below the 20% decline level at 3,855 to appreciate just how bad things had become. That is the past. We need to focus on the future like how low the stocks will go...and the best trades to stay on the right side of the market action. All that and more is in Steve Reitmeister “Bear Market Game Plan”. Read on below for more...

:  |  News, Ratings, and Charts

Insiders Are Making Big Buys In Carvana – Should You?

Used car retailer Carvana (CVNA) has seen significant insider buying recently, reflecting bullish sentiments. However, given its bleak bottom-line positioning, should you invest in the stock now? Read on to find out...

:  |  News, Ratings, and Charts

Don’t Get Fooled by the Recent Market Rally

The S&P 500 (SPY) has bounced with gusto this week. Maybe the bear market is not here to stay? Ha! Don't make me laugh. This is just one in a long line of "suckers rallies" before the next leg lower. The reasons why are spelled out below in this week's market commentary...

:  |  News, Ratings, and Charts

3 Top-Rated High-Dividend Stocks Under $20

The Fed’s aggressive interest rate hikes in the face of the rising inflation are raising the possibility of the economy tipping into a recession. Given the market uncertainties, high-dividend stocks Sisecam Resources (SIRE), Grindrod Shipping (GRIN), and Alliance Resource (ARLP), which are currently trading under $20, could be an ideal investment to ensure a stable income stream. These stocks are rated Strong Buy or Buy in our proprietary rating system. Keep reading…

:  |  News, Ratings, and Charts

Don’t Get Fooled by the Recent Market Rally

The S&P 500 (SPY) has bounced with gusto this week. Maybe the bear market is not here to stay? Ha! Don't make me laugh. This is just one in a long line of "suckers rallies" before the next leg lower. The reasons why are spelled out below in this week's market commentary...

Read More Stories

More Teva Pharmaceutical Industries Ltd. ADR (TEVA) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All TEVA News