Why Teva Pharmaceuticals Stock Blasted 6% Higher Today

Source The Motley Fool

A positive change in recommendation from a well-known bank was the fuel propelling Teva Pharmaceutical Industries's (NYSE: TEVA) well higher on Monday. The company, known for being a top producer of generic drugs, saw its share price swell almost 6% as a result. That was good enough to beat even the very frothy S&P 500's (SNPINDEX: ^GSPC) 3.3% gain that trading session.

Now a buy on cost-cutting and branded products

The person behind the modification was JPMorgan Chase analyst Chris Schott, who pushed up his Teva stock recommendation one notch from neutral to overweight (read: buy). He also bumped his price target higher, from $21 per share to $23. The new level anticipates upside of 28% on the most recent closing stock price.

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Person checking medicines on a shelf in a pharmacy.

Image source: Getty Images.

According to reports, much of Schott's new analysis of Teva centers on the cost-cutting measures the company announced recently. In his opinion, the $700 million initiative makes management's goal of reaching a 30% operating margin by 2027 achievable. At the same time, it should also provide sufficient room for the company to keep its pipeline programs funded.

Past that year, the prognosticator is bullish on Teva's branded products. In his estimation, drugs like Austedo, Olanzapine, and Duvakitug could drive the company's growth well higher.

Future growth in store

For the most part, the clutch of analysts tracking Teva are also expecting improvement in key fundamentals.

Collectively, they feel full-year 2025 revenue will tick up by almost 3% this year over 2024 to $17 billion, with per-share net income improving at just under 2%. And although 2026 revenue is forecast to creep less than 1% higher year over year, that per-share net income figure should rise by a robust 9%.

To me, Teva has quite a strong position as a crucial manufacturer of generic drugs. Yet it certainly isn't neglecting the branded side of its business, which is showing promise these days. I also like how management has assertively cleaned the balance sheet. Therefore, I don't blame Schott for being more bullish on Teva's future.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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