Value
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.1 |
| P/S | 8.8 |
| EV/EBITDA | 5.5 |
| Fwd P/E | 9.1 |
| PEG | 7.1 |
| Analyst target | 5.0 |
- ▸Forward P/E: 11.1x
- ▸PEG: 0.98
TEVA · Why this verdict
Why Teva Pharmaceutical Industries (TEVA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Teva Pharmaceutical offers attractive valuation with a forward price-to-earnings ratio of 10.9x and a PEG of 0.83, backed by a perfect 4-quarter earnings beat streak averaging 22.4% positive surprise, but the current price leaves only 5.6% upside versus 6.8% downside, making reward-to-risk unfavorable at this entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With 55% of revenue concentrated in generic medicines, Teva faces structural pricing pressure from biosimilar competition, government procurement discounts, and pharmacy benefit manager negotiations that can rapidly compress margins. Bear case | Revenue from non-generic segments growing to exceed 50% of total revenue within 12 months would signal successful product mix diversification. | →Stable |
| CounterTeva's scale in generics gives it cost advantages that smaller competitors cannot easily replicate, and market share in established generics tends to be sticky. | ||
At a forward price-to-earnings ratio of 10.9x and a PEG of 0.83, Teva trades at a meaningful discount relative to its demonstrated earnings power, with 4 consecutive beats averaging over 22% above consensus. Value | The valuation discount should compress as earnings beats continue, with the forward P/E contracting below 9x or the stock price rising to close the 21% analyst-target gap over 12 months. | →Stable |
| CounterThe generic medicines business is inherently commoditized with 55% concentration in that segment, and any pricing pressure or litigation outcome can quickly erode earnings estimates. | ||
Teva has beaten earnings-per-share estimates in all 4 of the last 4 reported quarters, with individual surprises of 7.3%, 15.7%, 50.2%, and 16.2%, suggesting management is conservative in guidance and operational execution is improving. Earnings | Continued above-consensus earnings delivery with positive surprise percentage above 10% in each of the next 2 reported quarters would confirm the beat cadence is sustainable. | →Stable |
| CounterThe most recent beat of 16.2% came off a much lower bar than the January 2026 quarter, and sequential earnings estimate revision trends could mean future beats are already priced in. | ||
Teva converts 167% of net income to free cash flow, and its Piotroski financial strength score is 7 out of 9, indicating a company that generates real cash well in excess of reported profits. Quality | Free cash flow conversion remaining above 120% of net income over the next four quarters would confirm the cash generation quality is structural rather than transient. | →Stable |
| CounterHigh debt-to-equity at 2.1x means a significant portion of that free cash flow must service debt, limiting what is available for reinvestment or shareholder returns. | ||
With 55% of revenue concentrated in generic medicines, Teva faces structural pricing pressure from biosimilar competition, government procurement discounts, and pharmacy benefit manager negotiations that can rapidly compress margins.
→StableBear case
- Expectation
- Revenue from non-generic segments growing to exceed 50% of total revenue within 12 months would signal successful product mix diversification.
CounterTeva's scale in generics gives it cost advantages that smaller competitors cannot easily replicate, and market share in established generics tends to be sticky.
At a forward price-to-earnings ratio of 10.9x and a PEG of 0.83, Teva trades at a meaningful discount relative to its demonstrated earnings power, with 4 consecutive beats averaging over 22% above consensus.
→StableValue
- Expectation
- The valuation discount should compress as earnings beats continue, with the forward P/E contracting below 9x or the stock price rising to close the 21% analyst-target gap over 12 months.
CounterThe generic medicines business is inherently commoditized with 55% concentration in that segment, and any pricing pressure or litigation outcome can quickly erode earnings estimates.
Teva has beaten earnings-per-share estimates in all 4 of the last 4 reported quarters, with individual surprises of 7.3%, 15.7%, 50.2%, and 16.2%, suggesting management is conservative in guidance and operational execution is improving.
→StableEarnings
- Expectation
- Continued above-consensus earnings delivery with positive surprise percentage above 10% in each of the next 2 reported quarters would confirm the beat cadence is sustainable.
CounterThe most recent beat of 16.2% came off a much lower bar than the January 2026 quarter, and sequential earnings estimate revision trends could mean future beats are already priced in.
Teva converts 167% of net income to free cash flow, and its Piotroski financial strength score is 7 out of 9, indicating a company that generates real cash well in excess of reported profits.
→StableQuality
- Expectation
- Free cash flow conversion remaining above 120% of net income over the next four quarters would confirm the cash generation quality is structural rather than transient.
CounterHigh debt-to-equity at 2.1x means a significant portion of that free cash flow must service debt, limiting what is available for reinvestment or shareholder returns.
Per-dimension breakdown
Quality
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.2 |
| ROA | 4.3 |
| Gross margin | 6.4 |
| Op margin | 7.7 |
| Net margin | 4.5 |
| Current ratio | 4.0 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 167% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
6.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.1 |
| EPS growth | 10.0 |
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 6.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.5 |
| Analyst rating | 8.2 |
| Price target | 7.7 |
- ▸LLM news sentiment: +0.70 (n=1)
- ▸Light analyst coverage (10.0) — signal dampened
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $18,880,464 (0.047% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 5.8 |
| growth rank | 3.3 |
Technical
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.8 |
| support resistance | 2.8 |
| 52w position | 8.3 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 6.0 |
| volatility | 3.7 |
| put call | 8.1 |
| implied vol | 4.0 |
| max pain risk | 3.0 |
| beta | 7.9 |
| debt equity | 2.9 |
| news risk | 6.0 |
- ▸Above max pain $20
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.1>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.4<1.5@spot
Warning (0)
none
Reward-to-Risk
0.42
Upside
+4.1%
Downside
9.9%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 49, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 8.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.4<1.5@spot) reinforce the read. Current asymmetry R:R is 0.42 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 8.1, Catalyst at 7.0, and Value at 6.8; the weakest are Peer rank at 3.5, Insider at 3.9, and Technical at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 0.42 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1At a forward price-to-earnings ratio of 10.9x and a PEG of 0.83, Teva trades at a meaningful discount relative to its demonstrated earnings power, with 4 consecutive beats averaging over 22% above consensus.
Trip ifForward P/E rises above 15x, indicating the valuation discount has fully closed and the stock no longer offers a margin of safety relative to earnings.
- P2Teva has beaten earnings-per-share estimates in all 4 of the last 4 reported quarters, with individual surprises of 7.3%, 15.7%, 50.2%, and 16.2%, suggesting management is conservative in guidance and operational execution is improving.
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters, breaking the current 4-quarter positive beat streak.
- P3Teva converts 167% of net income to free cash flow, and its Piotroski financial strength score is 7 out of 9, indicating a company that generates real cash well in excess of reported profits.
Trip ifFree cash flow as a percentage of net income drops below 80% in any reported 12-month period, signaling the conversion advantage has deteriorated.
- P4With 55% of revenue concentrated in generic medicines, Teva faces structural pricing pressure from biosimilar competition, government procurement discounts, and pharmacy benefit manager negotiations that can rapidly compress margins.
Trip ifGeneric medicine revenue grows to more than 60% of total revenue, indicating further concentration rather than diversification away from the commodity segment.