goldman sachs initiates buy rating on teva pharma stock

On Friday, Goldman Sachs analysts initiated coverage on Teva Pharmaceutical (TADAWUL:2070) Industries Ltd. (NYSE: NYSE:TEVA) with a Buy rating and set a price target of $24.00. The analysts highlighted an improving core business and potential for growth in the branded segment as key drivers for their positive outlook. According to InvestingPro data, Teva’s current market capitalization stands at $19.8 billion, with analyst targets ranging from $18.07 to $30.00, suggesting significant upside potential. The company’s shares currently trade below their InvestingPro Fair Value, indicating potential undervaluation.

The analysts pointed to strong growth prospects in Teva’s branded segment, which includes products like Austedo, Uzedy, Ajovy, and LAI olanzapine. They expect these assets to deliver robust growth, approximately 10% above consensus estimates for fiscal year 2027. This optimism is based on key opinion leader diligence, recent script data, and commercial investments, including direct-to-consumer campaigns. The company maintains a solid gross profit margin of 49.2% and has demonstrated revenue growth of 3.8% over the last twelve months.

In the generics segment, Goldman Sachs analysts anticipate limited growth over the coming years. While Teva’s expanding biosimilars portfolio, with five additional U.S. launches expected between fiscal years 2025 and 2027, presents opportunities, this growth may be offset by the expiration of the gRevlimid settlement in 2026.

Teva’s restructuring and cost-cutting efforts are expected to contribute positively to EBITDA estimates from fiscal year 2026 onwards. However, potential tariffs remain a downside risk that the analysts continue to monitor closely.

Overall, Goldman Sachs analysts are approximately 6% above FactSet consensus EBITDA estimates for 2027 and see room for further expansion with continued execution. InvestingPro analysis reveals that Teva maintains a "GOOD" overall financial health score, with particularly strong momentum metrics. For deeper insights into Teva’s financial health, valuation, and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, along with 7 additional key ProTips for informed decision-making.

In other recent news, Teva Pharmaceutical Industries has reiterated its financial targets for 2027, aiming for a 30% operating profit margin, supported by innovative product launches and a stable generics business. The company projects a free cash flow exceeding $2.7 billion by 2027 and plans to reduce its debt to 2x net leverage. On the analyst front, Truist Securities initiated coverage with a Buy rating and a $25 price target, expressing confidence in Teva’s growth strategy. Similarly, JPMorgan upgraded Teva’s stock from Neutral to Overweight, raising the target to $23, citing a $700 million cost-cutting initiative aimed at margin expansion.

Fitch Ratings upgraded Teva’s Long-Term Issuer Default Ratings to ’BB+’, reflecting progress in debt reduction and financial flexibility, while Moody’s upgraded the Corporate Family Rating to Ba1, maintaining a stable outlook. These upgrades are attributed to Teva’s improved credit metrics and ongoing growth in its branded franchises. Fitch and Moody’s both expect Teva to benefit from product launches in its branded and biosimilar portfolios, alongside cost-saving initiatives.

Teva’s innovative segment continues to perform well, with products like Austedo, Ajovy, and Uzedy driving revenue growth. The company aims to launch additional biosimilars by 2027, further supporting long-term revenue visibility. Despite challenges, such as litigation and geopolitical risks, Teva’s strategic focus on innovation and efficiency is expected to bolster its financial health and operational resilience.

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