Teva Pharmaceutical Industries: A Fresh Look at Its Comeback Story

Teva Pharmaceutical Industries is a turnaround story that deserves a fresh look. Despite market doubts, the company's story is improving. The market has missed the upside, and Teva deserves a Buy rating, according to a finance expert with experience at Bloomberg. The expert believes that Teva's comeback is significant and that the market has underestimated the company's potential.

Teva Pharmaceutical Industries has been navigating through a period of significant transformation, and recent financial reports indicate a notable improvement in its performance. Despite initial market skepticism, the company's strategic pivot towards innovation is yielding positive results, making it a compelling investment opportunity.

In the second quarter of 2025, Teva reported a 1% increase in revenue at constant currencies, reaching $4.2 billion. This growth was driven primarily by its innovative portfolio, which includes Austedo, Uzedy, and Ajovy. Austedo, a treatment for tardive dyskinesia and Huntington's disease, saw a 19% year-over-year increase in sales, with full-year guidance raised to $2 billion to $2.05 billion [1]. Uzedy, a long-acting risperidone for schizophrenia, more than doubled its sales to $54 million, with projections now at $190 million to $200 million for 2025 [1]. Ajovy, a migraine prevention therapy, posted a 31% growth to $155 million, with 2025 sales guidance raised to $630 million to $640 million [1].

The company's generics business, however, faced a 2% decline in sales due to intense competition and the exit from the Japanese market. Teva has streamlined its generics portfolio to focus on high-value complex generics and biosimilars, such as generic fidaxomicin and Selarsdi, a biosimilar to Johnson & Johnson's Stelara [2].

Teva's strategic shift towards innovation is not only about top-line growth but also about margin expansion. The company reaffirmed its 2027 financial targets, including a 30% operating profit margin, $2.7 billion in free cash flow, and net leverage reduced to 2x [2]. The innovative portfolio's high margins are already reshaping Teva's financial profile, with the schizophrenia LAI franchise projected to reach peak sales of $1.5 billion to $2 billion, with gross margins exceeding 80% [2].

Despite the challenges posed by pharmaceutical tariffs, Teva has been proactive in mitigating their impact. The company has absorbed the confirmed tariffs into its 2025 guidance and has very limited exposure to India and China, with more than 50% of its U.S. products manufactured locally [1].

Teva's localized U.S. manufacturing and diversified supply chain mitigate geopolitical and tariff risks, making it a resilient player in the pharmaceutical industry. The company's comeback is significant, and the market has underestimated its potential. A finance expert with experience at Bloomberg believes that Teva deserves a Buy rating, highlighting the company's near-term visibility and long-term potential [2].

References:
[1] https://www.fiercepharma.com/pharma/teva-execs-shrug-pharmaceutical-tariff-threat-turnaround-strategy-rolls-forward
[2] https://www.ainvest.com/news/teva-strategic-shift-innovation-era-earnings-growth-margin-expansion-2508/