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Why Teva Pharmaceutical Industries Fell Today

By Eric Volkman – Oct 27, 2021 at 6:01PM

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The pharmaceutical giant whiffs on both the top and bottom lines in its Q3.

What happened

Teva Pharmaceutical Industries (TEVA 1.07%) was an underperforming stock on Wednesday, and it wasn't hard to discern the reason why. The company's latest quarterly figures came in below analyst expectations, and investors punished the shares by driving them down by nearly 5% on the day.

So what

For its third quarter, the results of which were unveiled that morning, Teva earned revenue of $3.9 billion. This was down slightly from the $4 billion of the same quarter last year. On the other hand, non-GAAP (adjusted) net profit inched up across that stretch, to $651 million ($0.59 per share) from Q3 2020's $637 million. Meanwhile, the company's free cash flow saw significant growth, rising 57% to $795 million.

Customer conferring with a pharmacist at a pharmacy.

Image source: Getty Images.

Neither headline figure met analyst expectations. On average, Teva prognosticators were forecasting just over $4 billion in revenue and an adjusted, per-share net profit of $0.65.

On a slightly more positive note, Teva is confident that it will hit its previously announced guidance for the full year. The company is predicting it will take in $16 billion to $16.4 billion in revenue, with adjusted net income coming in at $2.50 to $2.70 per share. By comparison, the 2020 numbers were a respective $16.7 billion and $2.57.

Now what

Investors typically look forward, not back, with stocks, so the double miss on Q3 and the still-discouraging guidance has more than a few heading for the exit doors.

Still, there are reasons to stay bullish on Teva. While the bulk of the company's business is in generic drugs, Austedo, its treatment for Huntington's disease, and Ajovy, a migraine treatment, saw 19% and 31% increases, respectively, in U.S. sales.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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