Teva Pharmaceutical Industries, a very good stock for traders and investors looking for a real good investment for the future, at least we hope so.
Teva Pharmaceutical Industries Ltd develops, produces and markets generic, branded & OTC medicines. Its products include Copaxone, Azilect and Provigil.
Teva Pharmaceutical Industries Limited is a pharmaceutical company. The Company is engaged in developing, producing and marketing generic medicines and a portfolio of specialty medicines. The Company operates through two segments: Generic medicines and Specialty medicines.
The Company develops, manufactures and sells generic medicines in a range of dosage forms, including tablets, capsules, injectables, inhalants, liquids, ointments and creams. Its specialty medicines business focuses on delivering a range of solutions to patients and providers through medicines, devices and services in various regions and markets around the world.
Its specialty medicines business includes its core therapeutic areas of central nervous system (CNS) and respiratory medicines with a focus on asthma and chronic obstructive pulmonary disease. It also has specialty products in oncology, women’s health and selected other areas.
A value stock to buy hand over fist as the market crashes is brand-name and generic-drug developer Teva Pharmaceutical Industries (TEVA.N).
Teva has had a wide range of problems. Since the beginning of 2016, it’s settled bribery charges, shelved its dividend, dealt with generic-drug price weakness, grossly overpaid for Actavis and ballooned its debt, and is now knee-deep in litigation tied to its role in the U.S. opioid epidemic. Despite all of these problems, Teva looks to have turned the corner and is a genuine bargain for long-term investors.
The key to Teva’s turnaround is CEO Kare Schultz, a turnaround specialist who took over in September 2017. Since Schultz has taken the reins, the company’s net debt has declined from around $35 billion to $20.7 billion, as of the end of March 2022.
Schultz has reduced billions in annual operating expenses, sold non-core assets, and used some of the company’s roughly $2 billion in annual operating cash flow to pay down debt. By the end of 2023, more than half of the company’s net debt could be gone from when he became CEO.
The new CEO is also spearheading Teva’s efforts to put nationwide opioid litigation in the rearview mirror. Since early February, the company has settled with Texas, Rhode Island, and Florida over its role in the opioid crisis.
Teva was also on the winning side of a California trial, which found the defendant drug companies not liable for causing the opioid epidemic. By the end of this year, much of the uncertainty that’s shrouded the company regarding opioid litigation could be gone.
Thanks to the company’s improving financial flexibility, investors will be able to focus on the things that matter, such as the growth of brand-name drugs Austedo and Ajovy. The former is a treatment for tardive dyskinesia and is expected to hit $1 billion in sales this year.
Valued at just three times Wall Street’s forward-year earnings forecast, Teva is ripe for the picking.
In the past (2017), the company grossly overpaid for generic-drug maker Actavis, which ballooned its debt; it has seen its top-selling drug lose exclusivity (Copaxone for multiple sclerosis); and it has faced a mountain of litigation. With regard to the latter, Teva was sued by 44 state attorneys general over its role in the opioid crisis.
Although Teva has faced its fair share of headwinds, there are also plenty of reasons to believe things are looking brighter.
For example, investors should understand that, on a macro basis, healthcare stocks are quite defensive. No matter how poorly the stock market performs, people are still getting sick and requiring prescription medicine and healthcare services. This means historically high inflation and a bear market should have virtually no impact on Teva’s operations.
On a more company-specific basis, CEO Kare Schultz has done wonders since taking the reins in late 2017. In a little over 4.5 years, Schultz has reduced the company’s annual operating expenses by billions of dollars and whittled down net debt from north of $34 billion to $20.7 billion as of the end of March. Though work remains to be done, Teva’s financial flexibility is better than it’s been in a long time.
Furthermore, Teva has made notable progress with its opioid litigation overhang. Despite losing a trial in New York, the company was victorious in California, and it has settled with regulators in a number of other key states. It’s quite possible that Teva’s gray cloud could be gone within the next couple of months.
While Teva doesn’t offer the growth prospects of Ford or Western Digital, it looks incredibly inexpensive given its potential to generate $2 billion or more in annual cash flow.
The Company is engaged in developing, producing and marketing generic medicines and a portfolio of specialty medicines. The Company operates through two segments: Generic medicines and Specialty medicines. As of December 31, 2021, the Company had a global portfolio of over 1,800 molecules.
The Company competes with Biogen, Novartis AG, Genzyme, GlaxoSmithKline plc, Merck & Co. Inc., Sunovion, AstraZeneca plc, Chiesi, Allergan plc and Bayer AG.
Teva’s Global R&D organization helps propel the company’s mission to be a global leader in generics and biopharmaceuticals. From early development to commercial launch of small molecules, novel biologics and biosimilars, our uniquely integrated “One Teva” drug development model combines our strength in generics with our knowledge of innovative drug development. We understand the many ways that health impacts people’s lives, and will continue to invest in new breakthrough treatments, offer innovative solutions, and find new ways to extend and expand patient care beyond medicine.
After years of negotiations, Teva on Tuesday 07-26-2022 proposed a $4.35 billion nationwide settlement – mostly cash and partly medicines – to resolve its opioid lawsuits. Furthermore we must know that drugs with sales that total nearly $200 billion will be coming off patent in the next five years and $400 billion in the next decade. Teva, Schultz said, has 1,100 products in the pipeline to cover some 80% of those. In addition to annualized growth of mid-double digits, Teva set targets to further reduce its debt and raise its operating income margin and cash-to-earnings by 2027. It paid down $15 billion of debt over the last five years to a level of $20 billion, and Teva foresees that falling to $12 billion in 2027. For the full year, Teva expects revenue of up to $15.6 billion. While Teva is not in a position for big moves, Schultz said it could make small product acquisitions to expand its portfolio, while at the same time continuing to consolidate its manufacturing sites.
Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.