After taking back the $13 level in June, levels not seen since February, selling pressure sent Teva (NYSE:TEVA) to $11.35. The Department of Justice charged Glenmark, a generic pharma, with price manipulation for drugs sold in the U.S. This spooked Teva investors.
Admittedly, the Teva generics lawsuit is very old news. The company already booked provisions to prepare itself for a settlement. Still, this gave the market an excuse to sell shares. Price fixing, opioid accusations, and concerns over its debt levels will limit the upside in this generics giant.
At around $13 billion in market cap, The company is worth double that of Bausch Health (NYSE:BHC). Endo International (NASDAQ:ENDP) is worth just $813 million. Investors may consider switching from TEVA to BHC stock on valuation reasons alone.
The risk of the switch is that BHC may fall while Teva bounces back.
At a forward price-to-earnings of around four times, Teva is a deep value play if the stock keeps falling to $9 - $10.50. Value investors looking for an established turnaround player should consider Teva again if the selling trend continues.
The chances of the stock touching $7 - $9 are very low but if it gets there, it should bounce back. A litigation settlement would help bring the buyers to Teva shares.
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