I have been accumulating Teva Pharmaceuticals (TEVA) for a few months. I think is it is solid bargain given its low valuation as well as its solid earnings and revenue growth prospects. As we get closer to year end, I believe it is a great time to pick up more shares or established a position in the stock.
3 Key catalysts for Teva Pharmaceuticals
1. The stock is down some 25% for the year. Year end will remove the headwind of tax loss selling from the equity
2. It appears that TEVA has established some good technical support at just over the $35 price level (See Chart).
3. The company should launch a generic version of the blockbuster Lipitor by May.
4 reasons why TEVA is a solid value at under $40 a share:
1. The company is selling at the very bottom of its five year valuation range based on P/B, P/E, P/S and P/CF.
2. TEVA is selling significantly under analysts’ price targets. The median analysts’ price target on the stock is $54 and Credit Suisse has a price target of $53 on the company.
3. It is dirt cheap at just 7 times forward earnings. It also is projected to have double digit revenue growth in both 2011 and 2012.
4. The market is underpricing TEVA’s growth prospects. The company has grown earnings at better than a 17% annual clip over the last half decade and has a five year projected PEG of just over .8.