Hold Your Horses with Teva Pharmaceutical (TEVA) Stock

Teva (TEVA) stock’s chart for the past few months looks like nothing short of a roller-coaster ride. Shares of the Israeli drug giant soared nearly 10% in November, after a 10% drop in October. Investors who thought the November recovery was here to stay are already breaking into a cold sweat, with Teva shares dropping 27% so far in December.

Following the sharp sell-off in December, along with a government spat over the generic drug prices, many investors were once again left wondering whether Teva’s current stock price offers a good entry point. However, RBC Capital analyst Randall Stanicky urges investors to not commit their intended capital to Teva stock just yet. Stanicky reiterates a Sector Perform rating and price target of $22, which implies a potential upside of nearly 40% from current levels.

Stanicky noted, “TEVA is coming off a solid year that saw it execute well on its restructuring plan and benefit from milder than expected topline erosion. Focus is now on 2019 and whether that could bring trough EBITDA. While bull case expectations are that it can, our model points to continued sequential decline in 2020E though more modest. Annual declines for Copaxone, Bendeka, ProAir and QVAR through 2020E all need to be offset by growth products like Austedo/Ajovy that come with high expectations. Generics remain a wildcard; we expect margins to show improvement in 2019E but at ~21-22% of revenue US generics are not a major driver for TEVA. When you combine this with TEVA’s sector high valuation (more reasonable on sell-off) we see better value elsewhere.”

Wall Street backs Stanicky’s caution here, as TipRanks analytics reveal TEVA as a Hold. Based on 13 analysts polled in the last 3 months, 3 rate a Buy rating on Teva stock, 9 maintain Hold, while only 1 issues Sell. The 12-month average price target stands at $24.33, marking a 60% upside from where the stock is currently trading. (See TEVA’s price targets and analyst ratings on TipRanks)


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