What happened

Shares of Israeli generic-drug giant Teva Pharmaceutical Industries Limited (TEVA -4.11%) ended today's trading session up by a healthy 15% on above-average volume. The spark? Teva's stock marched higher today in response to an overall positive third-quarter earnings report released before the opening bell.

The big-ticket item, if you will, is the company's decision to raise its guidance for both its non-GAAP earnings, as well as its free cash flow for all of 2018.

Specifically, Teva announced a projected annual increase in non-GAAP earnings per share (EPS) to a range of $2.80 to $2.95, up from its prior guidance of $2.55 to $2.80. Likewise, the drugmaker stated that its free cash flow is now expected to come in between $3.6 billion to 3.8 billion -- a sizable hike compared to its previous projection of $3.2 billion to 3.4 billion for the year. 

A doctor holding a prescription pad.

Image source: Getty Images.

So what

Teva is in the midst of a global restructuring effort triggered by three things: the loss of exclusivity for its former flagship medication Copaxone, weakness in the U.S. generic-drug market, and its enormous debt load following its generic-drug deal with Allergan. So the drugmaker's ability to raise guidance on two key fronts against this rather dire backdrop is certainly encouraging news for Teva and its shareholders. 

Now what

Teva's turnaround ultimately is going to depend on the commercial performance of newer branded medications such as the injected migraine medicine Ajovy. The problem is that Ajovy may have a tougher time than expected when it comes to actually grabbing market share.

Express Scripts, after all, decided not to add Ajovy to its formulary last month, and that setback could cause Teva's turnaround story to start losing momentum in the months ahead. Put simply, investors will need to keep a close eye on this issue going forward.