Teva Pharmaceutical Industries Limited (TEVA - Get Rating) develops, manufactures, markets, and distributes generic medicines, specialty medicines, and biopharmaceutical products in North America, Europe, and internationally. The Petah, Tikva, Israel, company reported soft fiscal fourth-quarter results due to lower sales in its North America segment. While its $3.66 billion in revenue for the quarter missed the consensus estimate by 2.1%, its $0.55 adjusted EPS met the Street’s estimate.

The stock has declined 24.5% in price over the past month to close Friday’s trading session at $7.76.

The company lowered its 2022 revenue guidance to $15.40 – $16 billion from $15.60 – $16.20 billion due to currency headwinds and lower Copaxone sales. In addition, it is currently trading 32.8% below its 52-week high of $11.55, which it hit on June 10, 2021. However, it is seeing the continuing growth in Austedo prescriptions. Also, the company has been achieving market share growth for Ajovy. It also launched the first generic version of Revlimid in the United States. So, the stock’s near-term prospects look bright.

Click here to checkout our Healthcare Sector Report for 2022

Here is what I think could influence TEVA’s performance in the upcoming months:

Favorable Analyst Estimates

For its fiscal 2023, analysts expect TEVA’s EPS and revenue to grow 6.4% and 0.7%, respectively, year-over-year to $2.67 and $16.09 billion. In addition, its EPS is expected to grow at 1.7% per annum over the next five years. Furthermore, Wall Street analysts expect the stock to hit $10 in the near term, indicating a potential 28.9% upside.

Low Valuation

In terms of forward non-GAAP P/E, TEVA’s 3.10x is 84.1% lower than the 19.56x industry average. Likewise, its 0.55x forward P/S is 86.8% higher than the 4.18x industry average. Furthermore, the stock’s 0.76x forward P/B is 71.7% higher than the 2.70x industry average.

POWR Ratings Show Promise

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

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

TEVA also has a B grade for Growth, which is consistent with its revenue and earnings growth estimates.

Beyond what I have stated above, we have also given TEVA grades for Quality, Momentum, Stability, and Sentiment. Get all the TEVA ratings here.

TEVA is ranked #34 out of 167 stocks in the Medical – Pharmaceuticals industry.

Bottom Line

While TEVA lowered its revenue guidance for 2022, analysts expect the company’s revenue and EPS to increase in the long run. Furthermore, it is well-positioned to benefit from the rising market share of its products. So, it could be wise to buy the dip in the stock.

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

TEVA has an overall POWR Rating of B. One could also check out these other stocks within the Medical – Pharmaceuticals industry with an A (Strong Buy) rating: Merck & Co. Inc. (MRK - Get Rating), Novo Nordisk A/S (NVO - Get Rating), and Novartis AG (NVS - Get Rating).

Click here to checkout our Healthcare Sector Report for 2022

TEVA shares were trading at $7.91 per share on Monday afternoon, up $0.15 (+1.93%). Year-to-date, TEVA has declined -1.25%, versus a -15.52% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

More Resources for the Stocks in this Article