Summary
- Recent pullback to $8 presents incredible buying opportunity for long-term share appreciation.
- Streamlined company with major restructuring ongoing.
- Balance sheet is improving as net debt to EBITDA improves.
- Generics have begun to stabilize and international growth to drive company.
I had always known of Teva (TEVA) but its recent history and price level have made me stay away from investing and digging deep. However, the pullback that has brought this stock to $8 has generated quite a bit of interest. With coronavirus wreaking havoc on the market and upcoming election cycle, biopharma companies have been taking large hits. Like I mentioned before when there is blood in the streets, BUY!
Recent Troubles
The last few years have been a roller coaster for Teva. The company has been around for decades, a successful generics program that spurred a lot of growth several years ago. However, the company started to see troubles in 2015 when Novartis (NYSE:NVS) started to make a generic version of Copaxone, the Company was hit with lawsuits around drug price inflation for its generic antibiotic and diabetes lines as well as the most recent price fixing lawsuit corroboration and opioid epidemic lawsuit.
After causing massive strain on Teva, the issues seem to be settling, and the Company is actually looking like it will come out on top after all. The fear of bankruptcy had loomed over the company, but the debt offering and streamlined operations quickly nixed that notion.
Price Level
(Stockcharts.com)
The price has now fallen below $8 as I write this, a price level that was briefly seen but not held. With the new approach from the company, we should expect the $7 price level to hold and the previous price levels of above $12 to return in due time. For reasons I will explain below, I anticipate a $15 price target at a 1-year time horizon. Under $8 is an opportunity that has only been provided a handful of times in the past several years and has rewarded buyers greatly.
