TEVA PHARMACEUTICAL INDUSTRIES LIMITED (TEVA): what the price assumes

In the published model solve dated 2026-Q2, anchored at $36.44, TEVA PHARMACEUTICAL INDUSTRIES LIMITED (TEVA) is priced for +20.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/TEVA

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.9% sits below it).

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=9)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Teva is a turnaround: a large but shrinking generics base is being offset by fast-growing branded CNS drugs, led by Austedo, which grew 41% to $578 million in Q1 2026.
• The biggest issue is the balance sheet legacy: the Altman score of 0.68 sits in distress territory from years of acquisition debt and legal settlements, and management has committed to reaching 2x net debt to EBITDA by 2027.
• Watch the branded ramp against generic erosion and the neuroscience acquisitions (Emalex, Amylyx) that management says do not alter the deleveraging target.

Bull Case

The balance sheet is the whole turnaround, and it is finally moving in the right direction. Teva spent the last decade digging out from the debt of its Actavis generics acquisition and a series of legal settlements, and management has now committed to reaching 2x net debt to EBITDA by 2027, a target it reaffirmed even while announcing new neuroscience acquisitions. Free cash flow rose about 76% to roughly $200 million in Q1 2026, and the debt-to-equity ratio has come down to 0.32. A company that spends years proving it can generate cash and pay down obligations earns a re-rating, and Teva is in the middle of demonstrating exactly that.

The deleveraging is being funded by a branded portfolio that is compounding fast. The FY2025 10-K attributes growth to "revenues from our key innovative products AUSTEDO, AJOVY and UZEDY" plus a milestone payment on the Phase 3 start of duvakitug. The momentum accelerated into 2026: Austedo grew 41% to $578 million in Q1 with the company reaffirming full-year guidance of $2.4 billion to $2.55 billion, Ajovy grew 35% to $196 million, and Uzedy grew 62% to $63 million. These are branded drugs with pricing power and patent protection, the opposite of the commodity generics that historically defined Teva. Ajovy is taking share: the 10-K reports its U.S. exit market share reached "33.3%" of the subcutaneous injectable anti-CGRP class in 2025, up from 29.6% in 2024.

The strategy has a name and a direction. Management's Pivot to Growth reorients the company from defending a declining generics base toward a specialty and biosimilars future, and the Q1 2026 acquisitions in neuroscience (Emalex and Amylyx) extend that pipeline. The generics business, while eroding on price, still throws off the cash that services the debt and funds the branded ramp. The bull case is a credible deleveraging story riding a branded portfolio growing 35% to 60%, where each turn of debt paid down and each year of Austedo growth shifts the company from distressed to durable.

Bear Case

The structural truth a Teva holder would rather not face is that the stock is cheap because of what is deteriorating underneath the branded growth. This is still, at its core, a generics company, and the FY2025 10-K is candid that "our generic products face intense competition" and that revenues and profits "may decline as a result of competition from other pharmaceutical companies and changes in regulatory policy." Generic drug pricing erodes structurally, year after year, and the large legacy base that generates most of Teva's revenue is fighting that erosion constantly. The branded drugs are growing beautifully, but they are the smaller part of the business, and the bear case is that the shrinking generic base plus the debt overhang offsets more of the branded growth than the bulls credit.

The debt and legal legacy is the concrete version of that truth. The Altman score of 0.68 sits deep in distress territory, driven by the absolute debt load relative to earnings, and the deleveraging to 2x by 2027 is a target, not an accomplishment. The 10-K also documents the litigation tail: Teva reached "a deferred prosecution agreement with the DOJ to settle certain price-fixing and market allocation charges" in August 2023, part of a broader history of antitrust and opioid-related liabilities that have drained cash for years. A company carrying this much debt has little margin for a stumble in either the generic cash engine or the branded ramp.

The valuation methods split in a way that confirms the caution. Only the relative-multiple lens justifies the price; the asset-based, earnings-power, and even the growth-oriented methods all read the stock as expensive, sitting roughly two to two-and-a-half times what they support. The market is paying about 26x company-wide operating income and, while the implied growth of roughly 6% a year is not extreme, the price leans on that growth persisting for years against a generic base that structurally shrinks. The Q1 2026 free cash flow was strong, but the trailing pattern is uneven (operating cash flow was negative $40 million in the March quarter), and the quarterly financials are noisy enough that a single good quarter should not be mistaken for a completed turnaround. Cheap on one multiple, expensive on the rest, and still distressed on the balance sheet is the honest read.

Valuation

The methods disagree on Teva, and which one defends the price tells the story. At $32.93 (July 11, 2026), only the relative-multiple lens justifies the price; the asset-based, earnings-power, and growth-oriented methods all read it as expensive, sitting roughly two to two-and-a-half times what they support. That configuration says the stock looks reasonable against peer drug-manufacturer multiples but rich against its own asset base and earnings power, which is exactly what you would expect for a company whose reported profitability is being rebuilt off a debt-heavy, legally-scarred foundation.

Inverting the price frames a more moderate bet than the distress score alone suggests. The market is paying about 26x company-wide operating income and implicitly assuming roughly 6.3% annual operating growth for five years, a pace within what Teva has recently delivered. The margin requirement is undemanding, the business only has to hold a fraction of the roughly 16% operating margin it earns today, so the bet is on durability rather than expansion. The durability question is whether the branded portfolio (Austedo, Ajovy, Uzedy) keeps growing fast enough to more than offset the structural price erosion in generics the 10-K describes, and the Ajovy share gain to "33.3%" of its U.S. class is evidence the branded side is winning where it competes.

Solvency is the pivot point, and it reads as moderate leverage that is well covered on current cash flow but heavy in absolute terms. The Altman score of 0.68 reflects the legacy debt load more than any operating crisis, and the entire equity thesis hinges on the path to 2x net debt to EBITDA by 2027 that management reaffirmed. Free cash flow of roughly $200 million in Q1, up 76%, is the kind of progress that funds that path, but the trailing cash flow is uneven. The price is not stretched against peers; it is stretched against the balance sheet, and the valuation reduces to whether the branded growth and the debt paydown arrive fast enough to move Teva out of the distressed category it still occupies.

Catalysts

Q1 2026 showed the Pivot to Growth working at the product level. Revenue was about $4.0 billion (down 1%), with adjusted EBITDA up 2% to $1.1 billion and free cash flow up about 76% to roughly $200 million. The branded engine drove the quarter: Austedo grew 41% to $578 million (full-year guidance reaffirmed at $2.4 billion to $2.55 billion), Ajovy grew 35% to $196 million on U.S. and European share gains, and Uzedy grew 62% to $63 million on 75% underlying prescription growth.

The strategic news was a push deeper into neuroscience. Teva detailed planned acquisitions (Emalex and Amylyx) to expand its CNS portfolio, and stated that the Amylyx transaction has no impact on its commitment to reach 2x net debt to EBITDA by 2027. The items to watch are whether Austedo stays on its guided trajectory, whether Ajovy and Uzedy keep taking share, the pace of generic price erosion in the legacy base that funds the deleveraging, integration of the neuroscience acquisitions, and above all the quarterly progress toward the 2027 leverage target that governs the equity story. The next quarterly report is the immediate checkpoint.

Peer Cohorts (Per Segment, With Filing Citations)

International Markets (reported)

• AMRX (AMNEAL PHARMACEUTICALS, INC.)
• FY2025 10-K: …false FY 0001723128 2025 None None None None http://fasb.org/us-gaap/2025#OtherOperatingIncomeExpenseNet iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure iso4217:EUR amrx:product amrx:facility amrx:subsidiary amrx:state amrx:complaint amrx:case iso4217:USD amrx:twinPack amrx:vote amrx:candidate…
• FY2025 10-K: -01-01 2024-12-31 0001723128 amrx:AvtarInvestmentsLLCMember amrx:ResearchAndDevelopmentMember 2023-01-01 2023-12-31 0001723128 amrx:RSSolutionsLLCMember amrx:PropertyPlantAndEquipmentNetMember 2025-01-01 2025-12-31 0001723128 amrx:RSSolutionsLLCMember amrx:PropertyPlantAndEquipmentNetMember 2024-01-01 2024-12-31…
• VTRS (Viatris Inc)
• FY2025 10-K: RateSwapMember us-gaap:CashFlowHedgingMember us-gaap:InterestExpenseMember 2024-01-01 2024-12-31 0001792044 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:InterestExpenseMember 2023-01-01 2023-12-31 0001792044 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember…
• FY2025 10-K: …other unallocated ( 1,577.0 ) Loss from operations $ ( 2,663.1 ) 139 Table of Contents Year Ended December 31, 2024 (In millions) Developed Markets Greater China JANZ Emerging Markets Total Reportable Segments Net sales $ 8,929.4 $ 2,166.5 $ 1,346.2 $ 2,250.7 $ 14,692.8 Other revenues 32.0 1.3 3.5 9.7 46.5 Total…
• OGN (Organon & Co.)
• FY2025 10-K: …us-gaap:FairValueInputsLevel2Member 2025-12-31 0001821825 ogn:DevelopedMarketsEquitiesInvestmentFundsMember us-gaap:FairValueInputsLevel3Member 2025-12-31 0001821825 ogn:DevelopedMarketsEquitiesInvestmentFundsMember 2025-12-31 0001821825 ogn:DevelopedMarketsEquitiesInvestmentFundsMember…
• FY2025 10-K: …2025-12-31 0001821825 ogn:EmergingMarketsEquitiesInvestmentFundsMember us-gaap:FairValueInputsLevel3Member 2025-12-31 0001821825 ogn:EmergingMarketsEquitiesInvestmentFundsMember 2025-12-31 0001821825 ogn:EmergingMarketsEquitiesInvestmentFundsMember us-gaap:FairValueInputsLevel1Member 2024-12-31 0001821825…
• BHC (Bausch Health Companies Inc.)
• FY2025 10-K: :PensionPlansDefinedBenefitMember bhc:EmergingMarketsMember 2024-12-31 0000885590 us-gaap:FairValueMeasurementsRecurringMember us-gaap:PensionPlansDefinedBenefitMember us-gaap:ForeignPlanMember us-gaap:FairValueInputsLevel1Member bhc:NonU.S.DevelopedMarketsMember 2025-12-31 0000885590…
• FY2025 10-K: …such risks by spreading its risk across multiple counterparties and monitoring the risk profiles of these counterparties. The Company's trade receivables primarily represent amounts due from wholesale distributors, retail pharmacies, government entities and group purchasing organizations. Outside of the U.S.,…
• PFE (Pfizer Inc.)
• FY2025 10-K: …alternative pricing sources, such as investment managers or brokers, which use proprietary pricing models that incorporate unobservable inputs. Equity securities, Fixed income securities and Other investments may each be combined into commingled funds. Most commingled funds are valued to reflect the interest in the…
• FY2025 10-K: …us-gaap:FairValueInputsLevel3Member us-gaap:PensionPlansDefinedBenefitMember pfe:DefinedBenefitPlanEquitySecuritiesEquityCommingledFundsMember 2024-12-31 0000078003 us-gaap:ForeignPlanMember us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember us-gaap:PensionPlansDefinedBenefitMember…
• ABBV (AbbVie Inc.)
• FY2025 10-K: …0001551152 false 2025 FY http://fasb.org/us-gaap/2025#ResearchAndDevelopmentExpenseExcludingAcquiredInProcessCost http://fasb.org/us-gaap/2025#CostOfGoodsAndServicesSold http://fasb.org/us-gaap/2025#ResearchAndDevelopmentExpenseExcludingAcquiredInProcessCost…
• FY2025 10-K: …http://fasb.org/us-gaap/2025#InterestIncomeExpenseNonoperatingNet http://fasb.org/us-gaap/2025#InterestIncomeExpenseNonoperatingNet http://fasb.org/us-gaap/2025#InterestIncomeExpenseNonoperatingNet http://fasb.org/us-gaap/2025#InterestIncomeExpenseNonoperatingNet…
• BMY (Bristol-Myers Squibb Company)
• FY2025 10-K: CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CashFlowHedgingMember 2024-12-31 0000014272 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:LiabilityMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CashFlowHedgingMember 2024-12-31 0000014272…
• FY2025 10-K: 2023-12-31 0000014272 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:OtherIncomeMember 2023-01-01 2023-12-31 0000014272 us-gaap:ForeignExchangeContractMember us-gaap:CostOfSalesMember 2025-01-01 2025-12-31 0000014272 us-gaap:ForeignExchangeContractMember us-gaap:OtherIncomeMember 2025-01-01 2025-12-31…
• ABT (ABBOTT LABORATORIES)
• FY2025 10-K: …as cash flow hedges of the variability of the cash flows due to changes in foreign currency exchange rates and are marked-to-market with the resulting gains or losses reflected in Accumulated other comprehensive income (loss). Gains or losses will be included in Cost of products sold at the time the products are…
• FY2025 10-K: 000001800 us-gaap:OperatingSegmentsMember abt:OtherEmergingMarketsMember abt:EstablishedPharmaceuticalProductsMember 2025-01-01 2025-12-31 0000001800 us-gaap:OperatingSegmentsMember country:US abt:OtherEmergingMarketsMember abt:EstablishedPharmaceuticalProductsMember 2024-01-01 2024-12-31 0000001800…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.