When you think "top-performing pharma stock," Eli Lilly may first come to mind. Yet while Lilly's shares have surged over the past few years, they've only gained around 14% over the past year.
Contrast that with Teva Pharmaceutical Industries (TEVA 3.31%). The Israel-based drugmaker, best known for its focus on generics, has more than doubled in price over this time frame. Better yet, as the key driver of Teva's strong performance has only started to emerge, further gains may lie ahead.
NYSE: TEVA
Key Data Points
With its strengthening growth prospects, Teva may be the best healthcare stock to put $1,000 into right now. Here's why.
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Teva has knocked it out of the park
On Jan. 28, Teva released its latest earnings report, for the fourth quarter and the full year 2025. For the quarter, it reported stronger-than-expected results. Revenue came in at $4.7 billion, up 11% year over year.
Adjusted earnings per share (EPS) came in at $0.96, well above analyst forecasts averaging $0.64. For the full year, the company reported revenue growth of 5%, and non-GAAP (adjusted) earnings growth of 19%.
That said, $500 million in milestone payments from Sanofi for drug candidate duvakitug -- a potential treatment for ulcerative colitis and Crohn's disease -- skewed results for the quarter and the full year. Excluding these payments, revenue and earnings were up by just a few percentage points compared to 2024.
Guidance also calls for 2026 to be a transitory year, with total revenue expected to decline. However, the expectation of sluggish overall results belies major changes underway.
The longtime generic-drug maker plans to continue its pivot into specialty drugs. Strong sales of branded drugs like Austedo, Ajovy, and Uzedy are, for now, countering flat generics sales. In the years ahead, these products will become an increasingly larger share of Teva's revenue mix, leading investors to anticipate improved revenue, margins, and earnings growth.
Long-term investors haven't missed the boat
Much of Teva's rise throughout 2025 was because of the company's ongoing transformation. However, that hasn't become fully baked into the stock's valuation. Based on analyst forecasts for 2026, Teva currently trades for around 12.5 times forward earnings.
This is on the middle to lower end of the valuation range for pharmaceutical stocks. However, if you have a multiyear time horizon, you've yet to miss the boat. If the company's growth accelerates starting in 2027, shares could rise due to both earnings growth and multiple expansion.
Beyond further growth for Teva's aforementioned trio of branded specialty drugs, other pipeline candidates are poised to generate significant revenue in the years ahead. Management anticipates that duvakitug will eventually hit $2 billion to $5 billion in peak annual sales. Add in other candidates, and peak sales potential for the pipeline exceeds $10 billion.
Analysts may be anticipating EPS to fall 8.5% this year, before rising 12.3% in 2027, but in time these forecasts could prove conservative. Even if forecasts are on the money, a move to more than $3 per share in annual earnings, expected next year, could mean serious additional price appreciation for this stock. Consider Teva Pharmaceutical Industries a buy at current prices, and a screaming buy should the stock price unexpectedly tumble.
