Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Is Teva Pharmaceutical Industries Limited Stock a Bargain?

By George Budwell - Updated Apr 18, 2019 at 8:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Teva's shares were unfairly punished last month.

What happened

December turned out to be a historically turbulent month for big-pharma stocks, and generic-drug king Teva Pharmaceutical Industries Limited ( TEVA -2.56% ) was no exception. In fact, Teva's shares fell by a whopping 28.4% over the course of December, according to data from S&P Global Market Intelligence.

What drove this marked decline? Teva, like most of its biopharma peers, sank because of the market's overall downturn last month, as well as Johnson & Johnson's ( JNJ -1.41% ) so-called baby powder controversy.

Person in a suit holding a toy bear in one hand and a toy bull in the other.

Image Source: Getty Images.

So what

The fact that Teva's shares were punished mightily for J&J's troubles -- even though this alleged scandal has no bearing on Teva's outlook whatsoever -- shows just how moody the market was last month. In turn, bargain hunters have apparently started to take note of this unwarranted sell-off, causing the drugmaker's shares to rise by a healthy 19% over the first two weeks of the new year.

Despite this double-digit rally in early 2019, however, Teva's shares are still among the cheapest in the large-cap pharma space. At current levels, for instance, Teva's stock sports a rock-bottom price-to-sales ratio of 1.02.

Now what

Should investors take advantage of Teva's dirt-cheap valuation this year? The answer to this question is arguably a resounding yes. Teva's new management team has done a stellar job at trimming the fat and getting the company's debt problem under control over the last year. These efforts have thus attracted sizable investments from blue-chip investors, such as Warren Buffett. All told, Teva's days of cellar dwelling seem to be close to an end, making now a perfect time to buy this deeply undervalued pharma stock.

Check out the latest Teva Pharmaceutical earnings call transcript.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Teva Pharmaceutical Industries Limited Stock Quote
Teva Pharmaceutical Industries Limited
TEVA
$8.37 (-2.56%) $0.22
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$157.50 (-1.41%) $-2.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.