Are Investors Undervaluing Teva Pharmaceutical Industries (TEVA) Right Now?

Viatris Inc. VTRS delivered third-quarter 2024 adjusted earnings of 75 cents per share, which beat the Zacks Consensus Estimate of 68 cents. The company recorded adjusted earnings of 79 cents per share in the year-ago quarter.

Total revenues came in at $3.75 billion, down 4.8% year over year. Revenues included product sales and other revenues. The top line beat the Zacks Consensus Estimate of $3.68 billion.

VTRS’ shares have risen 7.2% year to date against the industry’s 5.1% decline.

All growth rates mentioned below are on a year-over-year basis and adjusted for the impact of proportionate results from the divestitures that closed in 2023 and 2024.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

VTRS’ Q3 Sales in Detail

Sales totaled $3.74 billion, down 5%. The company reports results under four segments — Developed Markets, Emerging Markets, Japan, Australia and New Zealand (JANZ) and Greater China.

Sales from Developed Markets amounted to $2.3 billion, down 5%. The reported number beat the Zacks Consensus Estimate of $2.2 billion.

Sales from Emerging Markets came in at $533.2 million, down 14%. The figure missed the Zacks Consensus Estimate of $567 million.

JANZ generated sales of $344.3 million, up 6%. Sales missed the Zacks Consensus Estimate of $396 million.

Sales from Greater China totaled $561.8 million, up 3%. The figure beat the Zacks Consensus Estimate by 0.02%.

Based on product category, revenues from Brands decreased 6% to $2.4 billion. Sales from this category were impacted by unfavorable channel dynamics in North America and the impact of government price regulations in Japan and Australia, which offset strong growth in Greater China and the expansion of the company’s portfolio in Emerging Markets and JANZ.

Among Brands, Lipitor sales totaled $375.6 million, down from $381.6 million in the year-ago quarter. Norvasc sales decreased to $168.9 million from $175.5 million a year ago. Lyrica sales were down to $129.9 million from $141.7 million.

Yupelri sales came in at $62.2 million, up from $58.3 million in the year-ago quarter.

Generics, which includes diversified product forms such as extended-release oral solids, injectables, transdermals, and topicals and complex generics, posted revenues of $1.4 billion, down 2%.

Viatris generated $133 million in new generic product revenues, primarily driven by Breyna (generic for Symbicort), lisdexamfetamine and other new products globally.

VTRS expects to generate $500-$600 million in new product revenues in 2024.

Adjusted gross margin came in at 58.5%, down from 59.2% reported in the year-ago quarter.

VTRS 2024 Guidance

Total revenues are projected to be in the band of $14.6-$15.1 billion (unchanged).

Adjusted earnings per share are now expected to be in the range of $2.56-$2.71 (earlier estimate: $2.58-$2.73).

Viatris Inc. Price, Consensus and EPS Surprise

Viatris Inc. price-consensus-eps-surprise-chart | Viatris Inc. Quote

Other Updates From VTRS

VTRS retired all of its 2025 and more than a quarter of its 2026 debt maturities, totaling approximately $1.9 billion in debt.

Last month, VTRS entered into an exclusive licensing agreement with Lexicon Pharmaceuticals LXRX for cardiovascular drug sotagliflozin in all markets outside the United States and Europe.

Per the terms, Viatris acquired rights to sotagliflozin in all global markets outside the United States and Europe in exchange for an upfront payment of $25 million to Lexicon. The agreement includes additional potential contingent payments, including regulatory milestones, sales milestones and tiered royalties ranging from low-double-digit to upper-teens on annual net sales. Viatris will be responsible for all regulatory and commercialization activities for sotagliflozin in the licensed territories.

Our Take on VTRS’ Q3 Performance

The company reported better-than-expected third-quarter results, wherein the top and bottom lines beat their respective estimates. New products performed well. However, the decrease in annual EPS guidance was disappointing.

With the substantial completion of its divestitures, VTRS has increased its financial strength and is looking to accelerate growth and shareholder return.

Zacks Rank and Stocks to Consider

Viatris currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the generic drugs sector are Bausch Health BHC and Teva TEVA, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 30 days, the Zacks Consensus Estimate for BHC’s 2024 earnings per share (EPS) has moved north 12 cents to $3.73. During the same period, EPS estimate for 2025 has increased to $4.29 from $4.17.

BHC’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 0.32%.

In the past 30 days, estimates for TEVA’s EPS have moved up a cent to $2.44. TEVA’s earnings beat estimates in three of the trailing four quarters and missed the mark once, delivering an average surprise of 10.16%.

Zacks Investment Research

Amicus Therapeutics FOLD reported third-quarter 2024 adjusted earnings of 10 cents per share, beating the Zacks Consensus Estimate of 8 cents. The company had incurred a loss of 1 cent per share in the year-ago quarter.

The year-over-year improvement can be attributed to higher revenues from Galafold (migalastat) sales and incremental revenues from the sale of the newly approved combo drug, Pombiliti + Opfolda.

Revenues in the third quarter totaled $141.5 million, up 37% year over year on a reported basis and 36% on constant-currency (cc) basis. The figure beat the Zacks Consensus Estimate of $134 million. The top line comprised sales of Galafold, which is approved for Fabry disease and Pombiliti + Opfolda.

The FDA approved Pombiliti + Opfolda, a two-component therapy for treating late-onset Pompe disease, in September 2023.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Despite the better-than-expected results, shares of Amicus were down 4.3% on Nov. 6 following the announcement of the news. The stock has plunged 20.8% so far this year compared with the industry’s decline of 2.5%.

Teva Pharmaceutical Industries TEVA reported third-quarter 2024 adjusted earnings of 69 cents per share, which beat the Zacks Consensus Estimate of 65 cents. Adjusted earnings rose 15% year over year.

Revenues for the third quarter came in at $4.33 billion, which beat the Zacks Consensus Estimate of $4.08 billion. Total revenues rose 13% on a reported basis and 15% on a constant currency basis.

Sales growth was mainly driven by higher revenues from generic products globally and strong growth from branded drugs, Austedo, Ajovy and Uzedy. Sales of certain product rights in Europe and International Markets segments also contributed to sales growth.

Generic Drugs Drive Sales in TEVA’s United States Unit

Sales in the United States segment (previously the North America segment) were $2.22 billion, up 17% year over year, driven by higher sales of generic products and branded drugs Austedo and Uzedy, partially offset by lower sales of other branded products Copaxone and Bendeka/Treanda. The segment’s revenues beat the Zacks Consensus Estimate of $2.07 billion as well as our model estimate of $2.0 billion.

Generic/biosimilar product revenues rose 30% from the year-ago period to $1.09 billion in the United States segment due to increased revenues from a generic version of Revlimid and the launch of a generic version of Novo Nordisk’s NVO Victoza (in late June). Generic revenues beat the Zacks Consensus Estimate of $955 million as well as our model estimate of $876 million.

Teva has a decent pipeline of biosimilars, with some being developed in partnership with Alvotech. A biosimilar version of AbbVie’s ABBV Humira called Simlandi was approved in February 2024 and launched in May. Selarsdi, a biosimilar version of J&J’s JNJ Stelara, was approved in April 2024, and per a settlement with J&J, Teva will launch the biosimilar in February 2025. Last month, the FDA accepted Teva’s application seeking approval for TVB-009P, a biosimilar candidate to Amgen’s bone drug, Prolia (denosumab). The FDA’s decision is expected in the second half of 2025.

Huntington's disease drug, Austedo, recorded sales of $435 million in the United States, up 28% year over year. Sales were mainly driven by volume growth as prescription trends continued to grow. Austedo sales missed the Zacks Consensus Estimate of $437 million but beat our model estimate of $430.8 million.

Ajovy recorded sales of $58 million for the quarter, up 4% year over year, driven by volume growth. Ajovy sales beat the Zacks Consensus Estimate of $56 million as well as our model estimate of $57.0 million.

Ajovy’s market share in the United States increased in terms of the total number of prescriptions from 24.9% in the year-ago quarter to 29.1% in the reported quarter.

For the first time, Teva separately announced sales of Uzedy (risperidone), a long-acting subcutaneous atypical antipsychotic injection for the treatment of schizophrenia, in the United States. The product, which was launched in May 2023, generated sales of $35 million in the third quarter compared with $2 million in the year-ago quarter.

Copaxone recorded sales of $69.0 million in the United States, down 30% year over year, due to generic erosion and increased competition. Copaxone sales beat the Zacks Consensus Estimate of $49.9 million as well as our model estimate of $50.8 million.

Combined sales of Bendeka and Treanda declined 28% from the year-ago quarter to $40 million. Sales of Bendeka and Treanda were hurt by generic erosion. Teva lost orphan drug exclusivity for bendamustine products in December 2022.

Distribution revenues generated by Anda rose 3% year over year in the quarter to $380 million due to volume growth.

TEVA’s Europe and International Markets Segment Performance

The Europe segment recorded revenues of $1.27 billion, up 10% year over year on a reported basis. Sales were up 11% on a constant currency basis, mainly driven by higher revenues from generic products and Ajovy and sales of certain product rights. Europe revenues beat the Zacks Consensus Estimate of $1.18 billion as well as our model estimate of $1.11 billion.

Generic product revenues in Europe rose 8% in constant currency terms to $973 million. Copaxone sales declined 5% to $53 million. Revenues from Ajovy sales increased 36% on a constant currency basis to $56 million.

In the International Markets segment, sales rose 4% year over year to $613 million. In constant currency terms, sales increased 18% from a year ago, driven mainly by higher generic revenues, partially offset by regulatory price reductions and generic competition to off-patented products in Japan. International Markets revenues missed the Zacks Consensus Estimate of $615 million as well as our model estimate of $659.4 million.

The Other segment (comprising the sales of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $229 million, up 6% year over year on a reported basis and 5% on a constant currency basis.

TEVA’s Margin Discussion

Adjusted gross margin was 53.7% for the quarter, up 20 basis points (bps) year over year, mainly driven by a favorable product mix (higher revenue from Austedo), partially offset by currency headwinds.

Adjusted research & development expenses declined 5% year over year to $240 million. Selling and marketing expenditure rose 9% from the year-ago level to $626 million. General and administrative expenses increased 11% from the prior-year level to $298 million.

Adjusted operating income rose 19.0% year over year in the reported quarter to $1.21 billion. Adjusted operating margin rose 150 bps to 28.0% in the quarter due to lower operating costs.

TEVA Slightly Raises Guidance for 2024

Teva slightly raised its revenue guidance from a range of $16-$16.4 billion to $16.1-$16.5 billion.

Teva maintained its guidance for Austedo sales of approximately $1.6 billion and Ajovy sales of approximately $500 million in 2024. Teva raised its Copaxone revenue guidance to approximately $500 million from the previous expectation of approximately $450 million, reflecting lower-than-expected erosion from competing therapies. The revenue guidance for Uzedy was raised from approximately $80 million to approximately $100 million, reflecting solid growing demand for the product.

Teva raised the lower end of its adjusted EPS guidance from a range of $2.30-$2.50 per share to $2.40-$2.50 per share.

The company now expects adjusted operating income in the band of $4.2-$4.5 billion compared with the previously expected range of $4.1-$4.5 billion. Teva expects its adjusted EBITDA in the band of $4.7-$5 billion compared with the previous guidance of $4.6-$5 billion.

Adjusted gross margin is expected to be between 53% and 54% in 2024. Operating costs are expected to be approximately 27% to 27.5% of revenues.

Adjusted tax rate is expected in the range of 14-17%. Free cash flow is expected to be in the range of $1.7-$2.1 billion, while capital expenditures are expected to be approximately $500 million.

Our Take on TEVA’s Q3 Results

Teva’s third-quarter results were strong as it beat estimates for earnings as well as sales. Teva’s generics business sales increased 17% in the quarter, driven by growth across all regions. Ajovy registered growth of 21% globally, driven by improving market share in all regions. Austedo sales rose 28%. The company also slightly raised the lower end of its earnings and sales guidance. However, despite the earnings beat and guidance increase, the stock was down more than 7% on Wednesday as investors were probably not impressed with the guidance increase.

Year to date, shares of TEVA have risen 66.9% against the industry’s decline of 5.3%.

Teva faces challenges like competitive pressure on some key branded drugs and a high debt load. However, its newer drugs, Austedo and Ajovy, as well as a stable generics business are reviving top-line growth. With the nationwide settlement for the costly opioid litigations, new product launches, stability of the generics segment with contribution from biosimilars and a robust biosimilar and branded pipeline, the path for Teva’s long-term growth is becoming clearer. Teva is saving costs and improving margins through the optimization of operations for efficiency while also lowering the debt on its balance sheet.

Teva plans to separate its API unit into a standalone business unit. The divestment is expected to be completed in the first half of 2025.

TEVA’s Zacks Rank

Teva currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Teva Pharmaceutical Industries Ltd. Price and Consensus

Teva Pharmaceutical Industries Ltd. price-consensus-chart | Teva Pharmaceutical Industries Ltd. Quote

Zacks Investment Research

Teva Pharmaceutical Industries Ltd reported third-quarter 2024 sales of $4.33 billion on Wednesday. It beat the consensus of $4.12 billion.

Revenues increased 13% year-over-year and 15% on constant currency. This was mainly due to higher revenues from generic products in all segments (i.e., Austedo in the U.S. segment), and the sale of product rights in Europe and International Markets segments.

Also Read: Amicus Therapeutics Settles Patent Lawsuit Teva Pharmaceuticals Over Generic Version Of Its Rare Genetic Disorder Drug

Generics business grows across all regions — increased by 30% in the U.S., 8% in Europe, and 13% in International Markets, in local currency terms compared to Q3 2023.

Generic products revenues in the U.S. segment (including biosimilars) were $1.09 billion, up 30% year over year, the majority of which was driven by higher revenues from lenalidomide capsules (the generic version of Bristol Myers Squibb & Co’s Revlimid), and the remaining, primarily by the launch of liraglutide injection 1.8mg — an authorized generic of Novo Nordisk A/S’ Victoza — and higher revenues from epinephrine injectable solution (the generic equivalent of EpiPen and EpiPen Jr).

• Austedo U.S. revenues increased 28% to $435 million. Ajovy's global revenues increased by 21% to $137 million.
• Uzedy’s U.S. revenues of $35 million.
• Teva says its intention to divest Teva API is on track, targeting completion in the first half of 2025.
• Adjusted EPS of 69 cents, higher than 60 cents a year ago, beating the consensus of 66 cents.
• Adjusted gross profit margin was 53.7% in the third quarter of 2024, compared to 53.5% in the third quarter of 2023.
• Adjusted operating margin reached 28%, down from 26.5% a year ago.
• Adjusted EBITDA was $1.34 billion in the third quarter of 2024, an increase of 17%.

Outlook: Teva expects fiscal year 2024 revenues of $16.1 billion-$16.5 billion versus prior guidance of $16.0 billion—$16.4 billion and consensus of $16.256 billion.

The generic pharma player expects 2024 adjusted EPS of $2.40-$2.50 versus prior guidance of $2.30-$2.50 and consensus of $2.45.

The company raised 2024 Uzedy sales guidance from around $80 million to approximately $100 million.

Price Action: Teva stock is up 1.76% at $19.10 during the premarket session at last check Wednesday.

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Dr. Reddy's Laboratories Limited RDY reported second-quarter fiscal 2025 earnings of 18 cents per American Depositary Share (ADS), which missed the Zacks Consensus Estimate of 19 cents per ADS. The company reported earnings of 21 cents per ADS in the year-ago quarter.

The bottom line was hit by a one-time acquisition cost and impairment charge on non-current assets.

Revenues grew 17% year over year to $957 million, which outpaced the Zacks Consensus Estimate of $879 million. The year-over-year improvement was primarily driven by growth in global generics revenues.

Shares of Dr. Reddy’s have risen 5% year to date compared with the industry’s 18.4% growth.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

RDY’s Q2 Results in Detail

Dr. Reddy’s reports revenues under three segments — Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.

Global Generics revenues totaled INR 71.6 billion, up 17% year over year. The increase was primarily driven by improved sales volumes and new product launches.

Dr. Reddy’s launched four new products in the United States during the reported quarter.

As of Sept. 30, 2024, cumulatively, 80 generic filings were pending approval from the FDA (75 abbreviated new drug applications [ANDAs] and five new drug applications). Of these 75 ANDAs, 44 were Para IVs.

PSAI revenues amounted to INR 8,4 billion, up 20% from the year-ago level. The improvement was driven by momentum in base business volumes, growth in services business and revenues from new products.

Revenues in the Others segment totaled INR 0.2 billion, down 74% year overyear.

Gross margin improved to 59.6% from 58.7% in the year-ago quarter due to a favorable product mix and overhead leverage. However, the uptick was partially offset by price erosion in generics markets.

Research and development expenses jumped 33% year over year to $87 million, driven by ongoing development efforts across generics, biosimilars and novel oncology assets.

Selling, general and administrative expenses totaled $275 million, up 22% year over year, primarily owing to investments in business growth and other initiatives. The company also incurred a one-time acquisition related cost on the acquisition of Nicotine Replacement Therapy (‘NRT’) portfolio.

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise

Dr. Reddy's Laboratories Ltd price-consensus-eps-surprise-chart | Dr. Reddy's Laboratories Ltd Quote

Key Pipeline Updates From RDY

Dr. Reddy’s acquired an NRT portfolio outside the United States and paid GBP 458 million in cash consideration pursuant to an agreement with Haleon plc.

The company entered into a non-exclusive patent licensing agreement with Takeda to commercialize vonoprazan, a novel gastrointestinal drug, in India.

Last month, RDY signed a voluntary licensing agreement with Gilead Sciences GILD to manufacture and commercialize lenacapavir in India and other countries.

GILD’s lenacapavir is indicated for the treatment of human immunodeficiency virus type 1 (HIV-1) infection in heavily treatment-experienced adults with multidrug resistant HIV-1 infection failing their current antiretroviral regimen due to resistance, intolerance, or safety considerations. Additionally, lenacapavir is currently under investigation for the prevention of HIV (PrEP).

Regulatory Updates

Dr. Reddy’s obtained marketing authorization from European Commission for the proposed biosimilar of rituximab following a positive opinion from the CHMP of the European Medicines Agency.

The company also received approval from the FDA for an investigational new drug application for AUR-112, a highly differentiated, potent and selective inhibitor of MALT1 being developed for the treatment of lymphoid malignancies.

The joint venture between Dr Reddy’s and Nestle India was operationalized in August 2024 to undertake the business of nutraceutical products and supplements in India and Nepal. 49% of the shares in the subsidiary have been transferred to Nestlé India.

RDY’s Zacks Rank & Other Stocks to Consider

Dr. Reddy’s currently carries a Zacks Rank #2 (Buy).

A couple of other top-ranked stocks in the same sector are Bausch Health BHC and Teva TEVA, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 30 days, the Zacks Consensus Estimate for BHC’s 2024 earnings per share (EPS) has moved north 12 cents to $3.73. During the same period, EPS estimate for 2025 has increased to $4.29 from $4.17.

BHC’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 0.32%.

In the past 30 days, estimates for TEVA’s EPS have moved up a cent to $2.44. TEVA’s earnings beat estimates in three of the trailing four quarters and missed the mark once, delivering an average surprise of 8.62%.

Zacks Investment Research

Teva Pharmaceutical Industries Ltd. (TEVA) reported $4.33 billion in revenue for the quarter ended September 2024, representing a year-over-year increase of 12.5%. EPS of $0.69 for the same period compares to $0.60 a year ago.

The reported revenue compares to the Zacks Consensus Estimate of $4.08 billion, representing a surprise of +6.12%. The company delivered an EPS surprise of +6.15%, with the consensus EPS estimate being $0.65.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how Teva Pharmaceutical Industries performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Geographic Revenue- International Markets: $613 million versus $615.37 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +26.4% change.
• Geographic Revenue- United States: $2.23 billion versus the four-analyst average estimate of $2.06 billion. The reported number represents a year-over-year change of +11.1%.
• Geographic Revenue- United States- COPAXONE: $69 million versus $49.93 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a -33% change.
• Geographic Revenue- United States- BENDEKA / TREANDA: $40 million versus $38.21 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a -29.8% change.
• Geographic Revenue- United States- AUSTEDO: $435 million versus the four-analyst average estimate of $436.83 million. The reported number represents a year-over-year change of +28.3%.
• Geographic Revenue- United States- Anda: $380 million versus the four-analyst average estimate of $351.57 million. The reported number represents a year-over-year change of +3.5%.
• Geographic Revenue- Europe- COPAXONE: $53 million versus the four-analyst average estimate of $47.56 million. The reported number represents a year-over-year change of -3.6%.
• Geographic Revenue- Europe- Respiratory products: $60 million versus the four-analyst average estimate of $57.37 million. The reported number represents a year-over-year change of -1.6%.
• Geographic Revenue- International Markets- Generic products: $477 million versus the four-analyst average estimate of $497.41 million. The reported number represents a year-over-year change of +25.2%.
• Geographic Revenue- International Markets- COPAXONE: $13 million versus $12.27 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +30% change.
• Geographic Revenue- United States- AJOVY: $58 million compared to the $56.34 million average estimate based on four analysts. The reported number represents a change of -4.9% year over year.
• Geographic Revenue- Europe- Generic products: $973 million versus the four-analyst average estimate of $930.59 million. The reported number represents a year-over-year change of +9.8%.

View all Key Company Metrics for Teva Pharmaceutical Industries here>>>

Shares of Teva Pharmaceutical Industries have returned +7.1% over the past month versus the Zacks S&P 500 composite's +0.7% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term.

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