Investors should buy the dip on this pharma stock with 40% upside, Truist says
Teva is positioning itself well for sharp gains in the near future after a decline this year, according to Truist Securities. The firm initiated shares of the generic drug maker with a buy rating. Analyst Les Sulewski set a price target of $25 per share, indicating upside of 41%. Shares of Teva have struggled this year, losing around 20%. However, Sulewski thinks that pullback created a buying opportunity for investors. "We think the company is well positioned to rival big pharma with its long-term durable growth strategy. With stock trading 25% off recent highs, we urge investors to accumulate," the analyst wrote. TEVA YTD mountain TEVA YTD chart Sulewski noted highlighted Teva's focus on margin improvement, which he said is being driven in part by: "High-margin specialty brands" such as Austedo and Ajovy, which are used to treat Huntington's disease and migraines, respectively. Plans to reduce manufacturing facilities to less than 22 from 34. "Mgmt continues to prioritize the company's Pivot to Growth plan, introduced 2023, with potential line of sight of ~300bps operating margin improvement by 2027," Sulewski added. "We look forward to hearing the next chapter for growth outlined in the company's upcoming Innovation and Strategy Day on May 29 when we anticipate mgmt to introduce an updated 5-year outlook, both figurative and thematic." The analyst noted that Teva's emphasis on specialty growth has not come at the cost of its identity as a "generics powerhouse," adding that the company "continues to benefit from new product launches, while ongoing portfolio cuts are helping to protect pricing and mix." Teva also has an innovative drug pipeline, which includes olanzapine to treat schizophrenia and duvakitug to treat ulcerative colitis and Crohn's disease. Teva shares gained more than 1% after Truist's bullish call. Most analysts are optimistic on Teva. LSEG data shows that eight of 11 covering the stock rate it a buy or strong buy. The average price target also signals upside of nearly 29%.
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