BofA cuts Teva stock price target to $20, maintains Buy rating

On Thursday, BofA Securities made an adjustment to Teva Pharmaceutical (TADAWUL:2070) Industries Ltd.’s (NYSE:TEVA) financial outlook. The firm’s analyst, Jason Gerberry, revised the price target downwards to $20.00 from the previous target of $23.00, while still maintaining a Buy rating on the stock. Currently trading at $15.90, Teva’s stock has seen a challenging year with a -28% YTD return, though InvestingPro data shows the stock’s RSI indicates oversold conditions, suggesting potential recovery opportunity.

The revision comes after a detailed analysis of the company’s future earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal years 2026 and 2027. The estimates were reduced by 4% and 1%, respectively. This adjustment is based on information disclosed by competitors that has impacted projections of the profitability of generic Revlimid, a key product for Teva. According to InvestingPro data, Teva’s current EBITDA stands at $4.43 billion, with analysts maintaining a consensus upside potential of 47% from current levels. Get deeper insights with InvestingPro’s comprehensive research report, available for over 1,400 US stocks.

Teva is anticipated to encounter challenging comparisons in 2026 as the market for its generic version of Revlimid transitions to a true generic, which will no longer provide the same level of sales revenue—estimated at $1 billion in 2025 with a 65% gross margin. BofA Securities now expects Teva’s EBITDA growth to remain flat in 2026 as they adjust their core generic gross margin assumptions.

Despite the lowered EBITDA forecast and price target, BofA Securities believes that the recent $6 billion loss in Teva’s market value since the fourth quarter is disproportionate to the magnitude of the estimate revisions. With a current market cap of $17.93 billion and an EV/EBITDA ratio of 7.55x, InvestingPro analysis suggests the stock is currently undervalued. The firm suggests that, barring unforeseen events with the price negotiation of Austedo, Teva’s bottom line growth could reaccelerate in 2027 and beyond, supported by InvestingPro’s forecast of positive net income growth this year. This potential is supported by the upcoming launch of three high-value branded products—olanzapine-LAI, ICS/SABA, and TL1a—which are expected to have competitive market profiles.

In light of these factors, the price objective has been adjusted to $20, reflecting both the revised estimates and a lower enterprise value/EBITDA multiple, which BofA Securities has changed to 8.5 times from the previous 9.25 times. Despite these changes, the firm’s Buy rating stands, indicating a positive outlook on Teva’s forthcoming product cycle.

In other recent news, Teva Pharmaceutical Industries Ltd. reported fourth-quarter earnings that surpassed analyst estimates, with adjusted earnings per share at $0.71, above the expected $0.69. The company’s revenue also exceeded projections, reaching $4.23 billion compared to the anticipated $4.1 billion. Despite this, Teva’s 2025 outlook fell short of Wall Street expectations, forecasting earnings per share between $2.35 and $2.65, below the consensus of $2.78, and revenue between $16.8 billion and $17.4 billion, against an estimate of $17.09 billion. In another development, the U.S. Food and Drug Administration accepted a supplemental New Drug Application for UZEDY, a treatment for bipolar I disorder, which is already approved for schizophrenia. This is a collaborative effort between Teva and Medincell, with Teva leading the regulatory process. Additionally, Axsome Therapeutics (NASDAQ:AXSM) settled a patent litigation with Teva, extending the exclusivity of its drug AUVELITY until 2039, contingent on FDA approval. Lastly, BofA Securities adjusted its financial model for Teva, maintaining a Buy rating but lowering the price target from $26.00 to $23.00, citing changes in margin expectations.

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