Teva Pharmaceutical Industries shares have risen around 85% over the past 12 months as the company shifts its focus from generic to branded drugs. Management expects earnings per share to fall in 2026 on acquisition dilution before biosimilar launches lift profit, while experimental bowel-disease drug duvakitug carries peak sales guidance of $2 billion to $5 billion.
Teva Pharmaceutical Industries (NYSE: TEVA) stock has surged by around 85% over the past 12 months, and the drugmaker's move away from generics is what carried it there. Shares have pulled back lately, yet The Motley Fool's Thomas Niel argues the turnaround rally still has a pipeline candidate behind it.
Branded drugs erode the generics majority
Teva's first-quarter 2026 financials showed that generic drugs now barely make up a majority of overall sales. Branded products, particularly recent hits Austedo, Ajovy and Uzedy, are posting mid-double-digit annual sales growth.
That shift carries a near-term earnings cost. Management expects earnings per share to drop from $2.65 in 2025 to between $1.91 and $2.11 in 2026, much of it from the initial dilutive effect of Teva's recent acquisition of Emalex Biosciences.
Biosimilars anchor the profit rebound
Starting next year, the anticipated launch of biosimilars and other factors should contribute to a 30% increase in operating profit and adjusted EBITDA. Next year's rebound also leans on incremental sales growth from the flagship branded drugs already selling.
Duvakitug is the swing factor
Beyond next year, duvakitug could be key to the turnaround. Teva co-developed the drug with Sanofi, and it is in clinical trials as a treatment for ulcerative colitis and Crohn's disease.
If phase 3 results prove as promising as the recently released phase 2b findings, the drug could be on the fast track toward commercialization. Management has previously guided for duvakitug to reach between $2 billion and $5 billion in peak annual sales.
Valuation forms the second part of Niel's case. The stock sells for less than 10 times estimated 2027 earnings, which he reads as leaving room for another rally on any duvakitug progress.
Source: Motley Fool
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