Pharmaceutical giant Teva Pharmaceuticals (NYSE:TEVA) tends to trade in a wide trading range. Whenever it rallies, it pulls back. And when it dips, buyers step in to stop the fall.
Teva stock is down a few points as investors look elsewhere for growth. In 2020, it posted a non-GAAP EPS of $2.57. Ajovy sales will grow after the launch of the auto-injector. Austedo demonstrated rapid growth. And the generic drug, Truvada and Atripla, which treats HIV-1, is promising.
North America has is the biggest source of revenue for Teva, followed by Europe. Both continents are growth drivers for Teva.
In 2021, Teva forecast EPS of $2.50 - $2.70. At current levels, the stock is undervalued. Investors have more upside potential from Copaxone sales stabilizing, Austedo and Ajovy revenue climbing, and costs declining.
Gross margin hikes will come from cost controls and restructuring. Teva will continue to improve quality from operations while integrating its supply chain. The company is applying Agile management to cut operational times. This should speed up the business turnaround.
Investors with a three-year time horizon should consider TEVA stock. Anyone looking for a short-term gain from this stock should avoid it. Its restructuring and revenue acceleration will take a few quarters to play out.
