• Wondering if Teva Pharmaceutical Industries at around US$35.35 is still offering value or if most of the opportunity has already been reflected in the price? This article breaks down what the current valuation signals are really saying.
• The stock has posted returns of 13.1% over the past week, 17.5% over the last month, 14.2% year to date and 115.7% over the past year, with a very large 3 year gain and a 244.9% 5 year return that naturally raise questions about risk and reward at today’s level.
• Recent coverage on Teva has focused on its progress as a large generic drug producer and the implications of its current capital structure, giving investors fresh context for how the market is treating the stock. Other commentary has highlighted ongoing interest in companies linked to healthcare demand, which can influence how investors view Teva’s long term prospects and risk profile.
• Even after these moves, Teva currently has a value score of 2/6. The discussion ahead will compare different valuation methods and then finish with a more rounded way to think about what the stock might be worth.

Teva Pharmaceutical Industries scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Teva Pharmaceutical Industries Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock might be worth by projecting the company’s future cash flows and then discounting those back to today’s value using a required rate of return.

For Teva Pharmaceutical Industries, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is about $1.17b. Analyst forecasts and subsequent extrapolations indicate annual free cash flows reaching about $4.04b by 2030, with interim projections such as $2.21b in 2026 and $3.02b in 2027. Simply Wall St uses analyst estimates where available and then extends the series with its own growth assumptions to complete the 10 year path.

Discounting this stream of projected cash flows results in an estimated intrinsic value of about $58.44 per share. Compared with the recent share price of around $35.35, the model suggests the stock is about 39.5% undervalued on this basis.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Teva Pharmaceutical Industries is undervalued by 39.5%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.

Approach 2: Teva Pharmaceutical Industries Price vs Earnings

For a profitable business, the P/E ratio is a straightforward way to see how much you are paying for each dollar of earnings. This makes it a useful cross check against a DCF model. What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk, with higher expected growth and lower perceived risk usually lining up with a higher multiple.

Teva Pharmaceutical Industries currently trades on a P/E of 26.30x. That is above the Pharmaceuticals industry average of about 16.92x and also higher than the peer group average of 20.52x, which suggests the stock is priced at a premium compared with many sector peers. Simply Wall St’s Fair Ratio for Teva is 21.55x, which is the P/E level its model suggests based on factors like earnings growth, profit margins, industry, market cap and company specific risks.

The Fair Ratio can be more useful than a simple peer or industry comparison because it adjusts for Teva’s own characteristics rather than assuming all companies in the sector should trade on the same multiple. With the actual P/E above the Fair Ratio, the stock currently screens as trading richer than what this framework would imply.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Teva Pharmaceutical Industries Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as a simple way for you to attach a story, your view on a company, to the numbers you see for fair value, future revenue, earnings and margins, and then see how that story translates into a financial forecast and an implied value for the stock.

On Simply Wall St, Narratives sit in the Community page and let you pick or build a view that links Teva Pharmaceutical Industries current business mix, pipeline, balance sheet and risks to specific assumptions, such as the more cautious fair value around US$21.53 or the more optimistic view around US$45.00, both of which are based on different expectations for future earnings, profit margins and P/E multiples.

By comparing the Fair Value from a chosen Narrative with the current share price, you can quickly see whether that story implies the stock is cheap or expensive on your assumptions. Because Narratives are refreshed when new information such as earnings results or news is added to the platform, your chosen story and the implied valuation stay aligned with the latest data without extra work on your side.

For Teva Pharmaceutical Industries, however, we will make it really easy for you with previews of two leading Teva Pharmaceutical Industries Narratives:

Fair value in this bullish Narrative: US$40.09

Gap to this fair value at the recent US$35.35 price: about 11.8% below the Narrative fair value

Analyst revenue growth input used in this view: 135.0%

• This view leans on a broad portfolio, higher margin branded products, and biosimilars as the main engines for future earnings, supported by cost savings and modernization.
• It builds in assumptions for revenue of US$18.1b and earnings of US$2.3b by 2029, with profit margins rising and a P/E of 26.6x applied to those earnings.
• Key cautions in this story are reliance on a handful of branded drugs, a sizeable debt load, regulatory and pricing risks, and the need for smooth execution on the pipeline and biosimilar launches.

Fair value in this bearish Narrative: US$21.53

Gap to this fair value at the recent US$35.35 price: about 64.2% above the Narrative fair value

Bearish analyst revenue growth input used in this view: 100.5%

• This view focuses on dependence on a narrow set of growth drivers, pressure on pricing in generics and biosimilars, and uncertainty around cost savings and supply chain changes.
• It assumes more modest medium term improvements, with revenue of about US$17.3b and earnings of US$1.6b by 2028, and a lower P/E of 20.7x applied to those earnings.
• Risks to this cautious stance include the possibility that branded products, the late stage pipeline, and cost programs support stronger margins and earnings than the bearish scenario allows for.

If you want to see how these two stories and others are built line by line into full financial forecasts, you can review the community views on Teva and track how they change as new data comes in by heading to the To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Teva Pharmaceutical Industries on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Teva Pharmaceutical Industries? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.