It should surprise exactly no one that Teva Pharmaceutical
Turns out, the view is bullish. Let's have a look at a few of the key sentiment drivers.
1. Analyst opinion
Analysts like Teva. Data from Capital IQ captures their collective feeling:
|
Opinion |
Number of Analysts |
|---|---|
|
Buy |
16 |
|
Outperform |
6 |
|
Hold |
7 |
|
Underperform |
0 |
|
Sell |
0 |
|
No Opinion |
2 |
Twenty-two analysts have either a "buy" rating or an "outperform" on the stock -- the majority sentiment. A portion (seven) of the analyst crowd deems the stock a neutral "hold," but there's not a single "sell," so we'll classify analyst sentiment as bullish.
2. Insider buying
In this article series, I next like to look at how insiders are buying or selling a stock. However, because Teva is based overseas and trades on the NYSE as an American Depositary Receipt, it is not required to file Form 4 with the SEC, which details insider buying and selling. Looking at its 20-F filing, we can glean that Teva's board of directors own more than 25.9 million shares, representing about 2.8% of total ownership. That figure is down from two years ago, when the board owned almost 36 million shares, representing a 4% stake.
Still, it's hard to read too much into that change. Insiders sell stock for a whole host of reasons -- to pay for a house or tuition, to diversify assets, and so forth. For purposes of this exercise, we'll classify insider buying/selling as neutral.
3. Guru buying
Next, we'll look at "guru" ownership of the stock, according to GuruFocus.
In the quarter ended Dec. 31, seven gurus traded Teva -- five buyers (John Paulson and Tom Gayner among them) and two sellers (including Jean-Marie Eveillard). In the previous quarter, the trend was similar, with four gurus buying and one selling Teva.
For the overall picture, we'll classify guru sentiment as bullish.
4. Retail investor community sentiment
For retail investor community sentiment, I turn to Motley Fool CAPS, our proprietary stock rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, indicating that the Fool community believes in a stock's future. Teva has the highest possible rating of five stars.
5. Short-sellers
Next we'll look at whether short-sellers are circling the stock. There are 6.5 million Teva Pharmaceutical shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 0.7%. That's not at all high, and so for determining sentiment, we'll classify the low short interest as bullish.
6. Does Buffett own it?
This is the "cherry on top" test, and in this case, it's a no: Berkshire Hathaway does not own shares of Teva. (Berkshire instead owns a few big-pharma competitors.)
Adding it up
The consensus opinion on Teva Pharmaceutical is bullish. Analysts and the CAPS community have a favorable outlook on the stock, and in another positive sign, short sellers are staying away. Gurus lean bullish as well. We get a neutral sign from our admittedly limited look at the insider buy/sell picture. The company fails just one test -- Berkshire doesn't own shares.
Of course, you can't base an investment philosophy on who likes or dislikes the stock you own, and even a consensus bullish opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
The purpose of this series of articles isn't to make a definitive buy-or-sell call on Teva. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on Teva's movements, and for more analysis on the company, make sure you add it to your Watchlist.
