Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) last week published its second quarter financial results in which it presented lower revenue but higher profit than predicted by the analysts – $4.2 billion and $0.66 per share respectively. Teva also raised sales guidance for branded drugs and annual profit guidance. On the day the report was published, Teva’s share price rose 1.8% on Wall Street but in the following days fell 8.6%. This morning Teva is down 4.74% on the Tel Aviv Stock Exchange (TASE).
Since the start of 2025, Teva has underperformed compared to other major companies in the sector. Since the start of the year the company’s share price has fallen 30.2% compared with an average fall of 4.8% in the S&P health care sector indices. The latest fall comes after a phenomenal year for Teva in 2024, in which it doubled its value. Today, after recent declines, the company’s stock has a market cap of $9 billion.
According to “The Wall Street Journal,” the average target price of 11 investment institutions covering Teva’s stock is $24.29, a 57.9% premium on the current share price, and almost all of them have positive recommendations for the stock.
Oppenheimer: “Excellent buying opportunity”
One of the investment banks whose price target for Teva’s stock is among the highest is Oppenheimer with a price target of $30, 95.1% higher than the price on the NYSE. Oppenheimer’s recommendation for Teva is “outperform.”
Oppenheimer writes, “In our opinion, the current market value of Teva’s stock does not reflect its future earnings potential, and constitutes an excellent buying opportunity for long-term investors.”
Oppenheimer adds, “Teva reported excellent results for the second quarter of the year and affirmed its strategic aims for 2027.” Teva’s aims for 2027 include a non-GAAP operating margin of 30%. In May Teva reported laying off 8% of its workforce – about 3,000 employees by 2027 – in order to save $700 million. The company’s CEO Richard Francis said after publication of the results last week that there is rapid progress in the plan, which is already generating annual savings for the company of $140 million in 2025.
Oppenheimer notes that achieving the 2027 aims needs significant growth in sales of branded drugs, operational efficiency and higher profit margins from branded drugs, which will allow creation of strong free cash flow. In their assessment, Teva will be able to achieve the aims earlier than expected. According to the Oppenheimer analysts, the drug Duvakitug, which is being developed together with Sanofi for gastrointestinal infections, is expected to begin phase 3 clinical trials in the fourth quarter, thus making Teva eligible for a payment of $500 million from Sanofi. In their assessment, the drug will be of equal importance to Copaxone in the future and may even overtake it in revenue in the far future.
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The sale of Teva’s active ingredients division will free up capital. Management said that a final decision will be made during the current quarter, and Oppenheimer estimates that its value will be $1.5-2 billion. “The US government places special emphasis on the sustainability of supply chains, and therefore this is likely to have a positive impact on the price that Teva is able to demand in the deal.”
Can rise by tens of percent?
Not only Oppenheimer believes in the Israeli pharmaceutical giant. A recent “Globes” survey of 14 institutional investors in the Israeli capital market found that many of them believed Teva’s stock is undervalued. For example, Migdal noted that it “currently trades at a 6.5-fold earnings multiple. Our assumption is that as confidence in revenue and profit levels in the coming years increases, the company will begin to trade at an earnings multiple that is more similar to ethical companies (branded drug manufacturers), which could result in a share price of $23-27.” This is while the stock is currently trading at a price that is over 50% lower.
Migdal believes that Teva is on the right track to get there, after over the past decade, “Succeeding in reducing debt 60%, significantly cutting expenses, improving production efficiency and creating a broader revenue mix, with a variety of new branded drugs. In addition, the company has built an impressive branded drug pipeline that is expected to provide it with a growth engine in the coming years.”
At the same time, Shmuel Ben-Arie, CIO at Pioneer Capital Management, also estimated last week in an interview with Globes that Teva is trading at a relatively low cash flow multiple, “and could easily rise 30%-40% in the coming year.”
Published by Globes, Israel business news – en.globes.co.il – on August 4, 2025.
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