Teva Pharmaceuticals: An Even Stronger Buy After Earnings

| About: Teva Pharmaceutical (TEVA)

Teva Pharmaceuticals (NYSE:TEVA) posted earnings Wednesday morning. I have been a bull on TEVA for quite some time and this earnings report should drive further gains in the stock and reaffirms why TEVA is a core part of the long side of my portfolio.

Key highlights from Teva's just released earnings report

  • Management is raising the stock's dividend by 25%
  • It reported quarterly earnings of $1.59 which beat consensus by a penny
  • More importantly, revenues expanded by 28.5% year over year to $5.68 which was $20mm over consensus.
  • The CEO reported that 2011 ended on a strong note and it is making progress in diversifying its product mix.

4 reasons TEVA is still a good buy at $44 a share:

  • The stock is showing increasing technical strength and now sits above its 200 day moving average (See Chart)

(Click to enlarge)

  • Credit Suisse is one of several firms positive on TEVA. The firm has a $53 price target on TEVA as well as an "Outperform" rating on the stock. In addition, it expects almost $6 a share in earnings for the company in FY2013.
  • Despite solid gains in the stock over the last few months, TEVA is selling near the bottom of its five year valuation range based on P/B, P/E, P/S and P/CF.
  • The stock sells for less than 8 times forward earnings, has a low five year projected PEG (.94) and is priced at 10 times trailing operating cash flow. With the announced dividend increase, TEVA now provides a 2% yield and has raised its dividend at a 25% annual clip over the past five years.

Disclosure: I am long TEVA.