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Teva: Maximum Optimism

Nathan Aisenstadt profile picture
Nathan Aisenstadt


  • Teva is one of the largest pharmaceutical companies in the world and the second largest generic medicine company (after Viatris) in terms of revenue.
  • Sales of the company's patent medicines continue to grow at a significant pace from quarter to quarter.
  • According to company management, in 2021, the cash flow will be $2-2.3 billion.
  • By 2023, the company may start selling several biosimilars, one of which is Humira's biosimilar, whose patent medicine brought AbbVie about $20 billion in 2020.
  • The company continues to reduce net debt by paying $1.475 billion in Senior Notes due July 2021.

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Объект Teva Canada Ltd в Уитчерч-Стоуффвилле, Штат On, Канада.
JHVEPhoto/iStock Editorial via Getty Images

This article was written by

Nathan Aisenstadt profile picture
I am an independent research analyst focused on finding undervalued assets with above-average growth rates and developments that can dramatically improve the company's financial position. When investing, I use medium-term and long-term trading strategies that take into account psychological and behavioral variables and are able to mitigate the risks associated with macroeconomic and geopolitical instability.The main sectors of analysis are industrials, consumer staples, technology, and healthcare.When analyzing assets in the healthcare sector, in addition to examining their financial position, I delve into the safety and efficacy data of the company's product candidates from preclinical and clinical studies, allowing me to evaluate their commercial prospects. While the education received at the Hebrew University of Jerusalem contributes to a comprehensive and detailed analysis of biotechnological and physicochemical processes used in the production of goods in the agricultural, oil and gas, and chemical industries. As a result, it allows me to find the most promising assets in a rapidly changing market and publish meaningful articles on Seeking Alpha.My e-mail for any questions and suggestions: aisenathan@gmail.com

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article may not take into account all the risks and catalysts for the stocks described in it. Any part of this analytical article is provided for informational purposes only, does not constitute an individual investment recommendation, investment idea, advice, offer to buy or sold securities or other financial instruments. If any fundamental criteria or events change in the future, I do not assume any obligation to update this article.

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Comments (52)

Dont worry about debt restructring, all planed debt will go lower, there are call dates for high coupon ones, they will call them back after settlement
If they fix the opioids settlement adequately, there is no way the price will remain below 10$. If you want to buy according your conditions 1 and 3, you will never buy shares in TEVA.
@MaxMaz The investment strategy is frightening.
Here is a plan. Require generics where available. MYL just spent $24 Billion in cash, shares and merger costs to buy 20 now generics with a name on the bottle/box. The deal of acquiring Upjohn, to become VTRS, also included access to China, where TEVA is not active. This just when China is cracking down on prices. The price reduction program they started is being rolled out now to the rest of VTRS products in this second half this year. Expect the cash-strapped rest of the world to note the benefit of this as well. VTRS also received Greenstone generics in the deal, thus acquiring a double helping now of price fixing liabilities. FWIW, I dumped VTRS for these and multiple other reasons as well, and continue to nibble on TEVA.
11 Aug. 2021
@Reprehensible I think Teva is better than Viatris. Or do you think it's the same thing?
Nathan Aisenstadt profile picture
Good afternoon.

Please note that according to the order of the President of the United States, by August 23, Health and Human Services must submit a report in which it will be “a plan to continue the effort to combat excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the Federal Government for such drugs, and to address the recurrent problem of price gouging; "


Thank you for your attention.
Nathan, if Teva fails to fall to 30% below book value, will you refrain from purchasing any shares despite your 157% upside prediction by 2025?
08 Aug. 2021
Interesting article. Thanks.
Nathan Aisenstadt profile picture
The Federal Circuit said GlaxoSmithKline won a $235 million case against Teva for selling a generic version of the heart drug Coreg.

purplemountaingirl profile picture
Great article
Nathan Aisenstadt profile picture
@Amby22 Thank you so much.

I really appreciate it.
I think that is quite reasonable respectation. Good article!
Nathan Aisenstadt profile picture
@sami_Buffet Good evening.

Thanks for your kind words.
TJRyan profile picture
Overly optimistic ya think...
Nathan Aisenstadt profile picture
@TJRyan Good evening.

General Electric has dealt with huge debt and its stock is up 110% + over the past year.

Teva has the prerequisites to repeat this.

Thanks for your time and comment.
arok79 profile picture
@Nathan Aisenstadt GE has the infrastructure as a huge tailwind. What does Teva have?
@arok79 ge also had a lot of valuable assets that they sold off.
Greenhorn Investor profile picture
Thank you for the article. The spring continues to coil and the outcome of the opioid settlement could have final say as to whether we blast off or remain coiled forever. Long TEVA.
Nathan Aisenstadt profile picture
@Greenhorn Investor Good evening.

I agree with you. In any case, the company's management is pursuing an effective policy and Teva has resources to survive the "opioid crisis".

Thanks for your comment and time.
Greenhorn Investor profile picture
@Nathan Aisenstadt re: Kåre Schultz...I'm a big fan.
Article is mostly a repeat of company reports, but worth reading. The buy/sell strategy is mechanical, complex, and odd. It's better to note that the company is getting better and stay with it, without arbitrary prices and dates. Investors, in general, would be better off following their companies more and their stock prices less.
Those selling are currently disappointed by TEVA not being included in the recent settlement with the deep-pocket companies. The real news is not TEVA not yet being included, but rather 1) a much doubted, near global settlement is possible after all, and 2) the price points are no longer potentially infinity, but rather are reasonable, and a guideline for TEVA.
I like more $ as much as the next guy. If I was the plaintiffs, I might be losing sleep wondering if I could have squeezed Billions more out of the deep-pocket guys. After all, they could still face their shareholders touting how they put all this behind them. I would not lose sleep over wondering if I could have squeezed TEVA (or for that matter, borderline solvent ENDP) for more than perhaps a few hundred million more. As TEVA CEO Kare quips, "I don't have $5 Billion just lying around."
Nathan Aisenstadt profile picture
@Reprehensible Good evening.

The company's management has 2 main goals, namely to reduce net debt and come to a settlement with the plaintiffs in the opioid crisis.

Thanks for your comment and time.
DeadManInvesting profile picture
One trifling correction. In discussing the possibility of stock sales, the author states, "Over the past few years, Teva has made public offerings in 2015 at $62.5 per share, up 84% from the current price." The current price is down 84%; the sale price was 525% higher than today's level. More substantially, as the writer has demonstrated with his meticulous report, I think there's a strong case the company is unanalyzable. There are too many moving parts, too many unquantifiable risks, and the author in the end seems to appreciate this with an almost platonic investment plan that will require re-analysis of every salient issue should hypothetical events and prices (such as a $7-$7.50 entry point, was it?) come to pass. But still, a very interesting company, so thank you.
Nathan Aisenstadt profile picture
@DeadManInvesting Good evening.

As I wrote to another participant in the conversation,

"Given the technical analysis, we are in the $ 6.18-13.5 price range from 2019.
Besides, there is a possibility of a correctional wave.

Taking into account the increase in the number of positive COVID-19 tests by 20% from week to week and other risks described in this article, I expect a decline in the company's shares to the buy zone I indicated."

Thank you for your comment.
gflander profile picture
@DeadManInvesting I agree - so many moving parts and assumptions, refinancing at what interest rates? I do not understand why he would wait so long to start a position (bankruptcy risk due to debt and/or opioid lawsuits does reduce with time, but share price will increase in that time too), and I do not foresee a $7-$7.50 entry point, and was amazed at a recent opportunity to buy more at $8.26 (the low that day was 8.24). But, we'll see... I've been "awful wrong" before
Nice thorough article, I believe $30's to $40's in the next 5+ years is achievable. Let's not forget the aging population in the decade ahead.
Nathan Aisenstadt profile picture
@WI-TX Good evening.

Thanks for your kind words.
uechi_ryu_dad profile picture
@Nathan Aisenstadt Thank you for a thoughtful article about Teva. But I don’t understand your buy strategy. You are waiting for Teva to decline by about 25% in share price before investing. What makes you think that the company share price is going to decline by another 25%? Also you want to wait until the opioid crisis is resolved before you invest further. Well then, wouldn’t you have missed the best buying opportunity if you wait until after the resolution in order to invest?
The strategy is to buy the stock 30% below current level? At the lowest historical EV by far? Lol
Nathan Aisenstadt profile picture
@BondsYield - CFA Good evening.

Given the technical analysis, we are in the $ 6.18-13.5 price range from 2019.
Besides, there is a possibility of a correctional wave.

Taking into account the increase in the number of positive COVID-19 tests by 20% from week to week and other risks described in this article, I expect a decline in the company's shares to the buy zone I indicated.

Thank you for your comment.
@Nathan Aisenstadt

Taking the price range to determine an entry point without knowledge of previous events is a very poor take.

You ll never see TEVA in this price range unless things go very bad on the opioid side. I am sorry but it makes no sense writing a bull article with an entry point 30% below the current price, that is very odd.

$7 implies 6 EV/EBITDA and EV 2bn below the lowest point hit during summer 19 at the height of the opioid fear when there was no global settlement, 4bn additional debt, a 2022 maturity wall and no bio similar pipeline.

Good luck.
Growth And Value profile picture
@BondsYield - CFA Not to mention the whole Copaxone drama was still playing out. Tough days.
If they successfully settle the opioid issue (criteria #1), you will not be able to buy the stock below $10. It will be in the 20's !
Nathan Aisenstadt profile picture
@vulture54 Good evening.

Thank you for your comment.

The most correct strategy is to wait for court decisions.

In any case, the company becomes attractive to long-term investors.
gflander profile picture
@Nathan Aisenstadt I think the court/"beneficiaries of the $" both don't want to bankrupt TEVA, but be realistically patient to get their money and those free drugs from TEVA over time. They are aware of TEVA's debt too. They would be foolish to kill an already debt-wounded golden goose. But, when people are involved, funny things can happen. I still struggle to fully understand lawsuits and the precedence with the basis of "public nuisance", but where the FDA did not disapprove the drugs or provide guidance or restrictions (still), and Doctors had to write the prescriptions. Not simple, and if they knew how addictive they are without proper warnings, that is indeed wrong.
purplemountaingirl profile picture
@gflander plenty of competitors would buyout Teva and refinance that debt ...
Settlement needed to go up
Nathan Aisenstadt profile picture
@GNR8NRG Good evening.

First, thanks for the comment.
I agree with you.

The CEO of the company believes that the company will be able to reach a settlement within the next year. But due to the ongoing COVID-19 pandemic, the settlement process will take time, most likely slightly more than management plans.
The most important thing is that the outcome of the opioid crisis does not go beyond the planned.

In addition, Endo Pharmaceuticals signed a definitive settlement and resolution agreement for the opioid case in the Circuit Court for Sullivan County, Tennessee recently.
gflander profile picture
@Nathan Aisenstadt Please tell me more:
Why wait so long to start a position (bankruptcy risk due to debt and/or opioid lawsuits does reduce with time, but share price will increase in that time too), and I do not foresee a $7-$7.50 entry point, and was amazed at a recent opportunity to buy more at $8.26 (the low that day was 8.24). But, we'll see... I've been "awful wrong" before
gflander profile picture
@Nathan Aisenstadt Another thought - the COVID crisis helped "de-demonize" "Big Pharma" somewhat. And, we will likely need COVID vaccines for a decade as we seek to stay on top of variants. So, the zeal to crush "Big Pharma" may become diminished. (I wonder why young people have not started a campaign against "Big Universities" robbing them of their financial future - talk about a public nuisance - why have Universities escaped culpability - they've increased tuition at a rate greater than inflation for decades??)
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