We came across a bullish thesis on Teva Pharmaceutical Industries Limited (TEVA) on Substack by Kontra. In this article, we will summarize the bulls’ thesis on TEVA. Teva Pharmaceutical Industries Limited (TEVA)’s share was trading at $21.31 as of Dec 19th. TEVA’s trailing and forward P/E were 872 and 7.61 respectively according to Yahoo Finance.
A close-up shot of various types of medicines on a table, illustrating the specialty and generic products offered by the pharmaceutical company.
Teva Pharmaceuticals has demonstrated impressive progress in its transformation journey, underscored by resilience and strategic execution. With 2025 underway, Teva is well-positioned for continued growth, and its share price could approach $30 in the next 12–18 months, reflecting strong fundamentals and strategic advancements.
Central to Teva’s momentum is its leadership in the emerging anti-TL1A drug class, exemplified by the groundbreaking success of duvakitug. This experimental drug for ulcerative colitis (UC) and Crohn’s disease (CD) achieved best-in-class results in the Phase 2b RELIEVE UCCD trial, meeting primary endpoints with significant clinical improvements and a strong safety profile. These results affirm duvakitug’s potential to become a cornerstone therapy for inflammatory bowel diseases and other conditions. The trial’s success has positioned Teva as a leader in the TL1A space, a field marked by major deals such as Merck’s $10.8 billion acquisition of Prometheus and Roche’s $7.1 billion purchase of Televant. Sanofi’s $1.5 billion collaboration with Teva further highlights the strategic value of duvakitug, validating its innovative mechanism and market potential.
Teva’s financial discipline and focus on deleveraging bolster its investment case. The company projects a reduction in net debt from $12.6 billion in 2024 to a surplus by 2028, with deleveraging expected to add approximately $14 to its share price. Operational streamlining has enhanced shareholder value and credibility, while the anticipated divestiture of its API business could unlock further hidden value. Despite these achievements, Teva remains undervalued, trading at just 8x 2025 earnings estimates, with a projected 10% annual EPS growth. Its return on invested capital (ROIC) is poised to rise significantly, reflecting improved efficiency and profitability.
Teva also boasts a compelling growth trajectory, with revenue expected to increase by 15% and EBIT by 30% from 2024 to 2028. Free cash flow yield, currently at 9.8%, is projected to exceed 16% by 2028, underscoring its ability to sustain long-term cash generation. Key catalysts include the full data presentation for duvakitug in 1H25 and the API sale announcement, both of which could drive significant upside.
Risks remain, including potential delays in Phase 3 trials for duvakitug, slower-than-expected adoption of new products, and macroeconomic pressures. However, Teva’s strong execution, innovation, and undervaluation present a compelling investment opportunity with multiple catalysts for substantial growth in the coming years.
Teva Pharmaceutical Industries Limited (TEVA) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held TEVA at the end of the third quarter which was 68 in the previous quarter. While we acknowledge the risk and potential of TEVA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TEVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.