MARGIN MASTERY AND PIPELINE POWER: WHY NI AND TEVA ARE POISED FOR A BREAKOUT

In a market obsessed with top-line growth, two companies—National Instruments (NI) and Teva Pharmaceutical—are quietly rewriting the playbook. By focusing on operational realignment, margin expansion, and R&D-driven catalysts, they’re unlocking value in overlooked corners of their industries. Here’s why investors should act now.

National Instruments: Squeezing Profit from Strategic Pruning

NI, a subsidiary of Emerson, has made a deliberate shift from chasing scale to prioritizing profitability. Over the past year, it has slashed unprofitable operations—exiting the Nevada insurance market and reducing premiums in Chicago’s Non-Standard Auto segment—while doubling down on its core Home and Farm segment, which grew 7.1% in Q1 2025. This ruthless focus has kept its combined ratio at 94.4%, a fortress-like metric in an industry where even small swings can crater margins.

But the real magic is in the balance sheet and technology. NI’s AI-driven cost reductions—aimed at cutting operating expenses by 15–20%—are now backing its 2025 target of 18% non-GAAP operating margins, up from 15% in 2024. Meanwhile, its test-and-measurement tech (think partnerships with Archer Aviation and Qualcomm) is positioning it as a leader in 5G/Wi-Fi 7 validation and autonomous systems.

The skeptics argue that NI’s 18.4% drop in direct written premiums is a red flag. But management sees it as a virtue: “We’re trading top-line for bottom-line resilience,” CEO Seth Daggett told investors. With $2.8M in rising net investment income and a refinanced debt load (average maturity now 5.7 years), NI is building a moat in a fragmented industry.

Teva Pharmaceutical: The Pipeline That Just Keeps Delivering

Teva is often written off as a generics laggard, but its 2025 pivot is anything but. The company is leveraging its UZEDY antipsychotic (up 156% year-over-year to $39M in Q1) and a biosimilar juggernaut to reinvent itself. Its SIMLANDI (Humira biosimilar) and SELARSDI (Stelara biosimilar) are dominating U.S. markets, driving a 5% revenue jump in its domestic business.

The numbers are stark: Teva’s non-GAAP operating margin hit 24.3% in Q1, up from 23.4% a year ago, with $532M in U.S. segment profit—up 52%—thanks to AUSTEDO and UZEDY. And the best is yet to come. Its Duvakitug (anti-TL1A) pipeline drug, targeting inflammatory bowel disease, could generate blockbuster sales if Phase 3 trials succeed in H2 2025.

Meanwhile, Teva’s balance sheet is strengthening. Debt has fallen to $16.65B, with $107M in free cash flow in Q1. Management has raised its full-year non-GAAP EPS guidance to $2.45–2.65, signaling confidence in hitting its 30% operating margin target by 2027.

Why Act Now? The Margin and Pipeline Catalysts Are Mispriced

Both NI and Teva are trading at valuations that ignore their margin trajectories and R&D payoffs.

• NI’s 18% margin target is achievable given its cost cuts and tech leverage, yet its stock trades at just 12x EV/EBITDA—a discount to peers.
• Teva’s pipeline is undervalued: its biosimilars and UZEDY growth could push margins to 30% by 2027, but the stock still trades at 5.8x forward P/E, a 30% discount to pharmaceutical peers.

Investors are underestimating two trends:
1. Margin-driven restructurings are now table stakes. Companies that can cut costs and invest in growth (like NI’s AI and Teva’s Duvakitug) will outperform.
2. R&D catalysts are timing-sensitive. Teva’s upcoming FDA decisions and NI’s AI efficiency gains could trigger re-ratings ahead of Q4 earnings.

The Bottom Line: Buy Before the Market Catches Up

NI and Teva are classic “value through discipline” plays. NI’s margin focus and tech bets, paired with Teva’s biosimilar dominance and pipeline catalysts, create a rare combination of defensive stability and growth upside. With both stocks priced for stagnation—and Q4 earnings likely to confirm their trajectories—now is the time to act.

Investors who wait for “proof” risk missing the rally. These companies aren’t just surviving—they’re rebuilding their industries, one margin point at a time.