Should I Buy Teva Stock?
Teva Pharmaceutical Industries Ltd (TEVA) is the world’s largest generic drug manufacturer, with a presence in 60 countries and over 37,000 employees. The company has been facing several challenges in recent years, such as declining sales, legal disputes, debt burden, and competition from rivals. However, some analysts believe that Teva has the potential to turn around its fortunes and deliver value to its shareholders. Here are some pros and cons of investing in Teva stock.
- Teva has a diversified portfolio of generic and specialty drugs, covering various therapeutic areas such as central nervous system, respiratory, oncology, pain, and biosimilars. The company also has a strong pipeline of new products, with over 300 pending approvals in the US and over 600 in Europe.
- Teva has been implementing a restructuring plan since 2017, aiming to reduce its cost base by $3 billion annually by the end of 2022. The company has also been divesting non-core assets and paying down its debt, which stood at $23.6 billion as of December 2020, down from $34.7 billion in 2017.
- Teva has been investing in innovation and digital transformation, leveraging its data and analytics capabilities to improve its operational efficiency, customer experience, and market access. The company has also been partnering with tech giants such as Amazon and Google to expand its online presence and distribution channels.
- Teva has a low valuation compared to its peers, trading at a forward P/E ratio of 3.6 as of May 4, 2021. The company also has a positive earnings outlook, with analysts expecting a 10% growth in EPS for 2021 and a 5% growth for 2022.
- Teva faces significant legal risks, as it is involved in several lawsuits and investigations related to its alleged role in the opioid crisis, price-fixing allegations, patent infringements, and bribery charges. The company has set aside $3.1 billion for legal settlements as of December 2020, but the final outcome and cost of these cases are uncertain and could be higher than expected.
- Teva faces intense competition from other generic drug makers, such as Mylan, Sandoz, and Sun Pharma, as well as from branded drug makers who are launching their own generics or biosimilars. The company also faces pricing pressure from customers such as pharmacy benefit managers and wholesalers, who have more bargaining power due to industry consolidation.
- Teva faces regulatory uncertainties, as it depends on the approval and launch of new products to offset the loss of exclusivity of its existing products. The company also faces potential disruptions in its supply chain due to the COVID-19 pandemic, geopolitical tensions, or natural disasters.
- Teva does not pay a dividend to its shareholders, as it suspended its dividend payments in 2017 to focus on debt reduction. The company has not indicated when it will resume its dividend policy or what level of payout it will offer.
Teva stock is not for the faint-hearted, as it involves high risks and uncertainties. However, for investors who are willing to take a long-term view and have a high tolerance for volatility, Teva stock could offer an attractive opportunity to buy a leading generic drug maker at a low price with a potential upside.