Teva beats earnings as innovative medicines drive third growth year
Innovative brands surpass $3B as credit ratings upgraded, deleveraging on track
Teva Pharmaceutical Industries delivered a stronger-than-expected fourth quarter, reporting non-GAAP earnings per share of 96 cents on revenue of $4.71 billion, comfortably beating analyst estimates that called for roughly 67 cents EPS on $4.34 billion in sales. The results mark the Israeli drugmaker's third consecutive year of growth, with full-year 2025 revenue reaching $17.3 billion, a 4 percent increase from the prior year.
The performance underscores progress in Chief Executive Richard Francis's "Pivot to Growth" strategy, launched in May 2023, which has focused on bolstering the company's innovative portfolio while aggressively reducing debt. Key innovative brands — led by Huntington's disease treatment AUSTEDO, migraine therapy AJOVY, and schizophrenia drug UZEDY — collectively surpassed $3 billion in 2025 revenue, growing 35 percent year-over-year. In the fourth quarter alone, these brands generated approximately $1 billion in combined sales for the first time.
"Our key innovative brands delivered strong growth and were the main driver behind our third consecutive year of growth in 2025, solidifying our transformation into a leading biopharmaceutical company," Francis said in a statement.
The strength of Teva's core franchise has earned recognition from credit rating agencies. Throughout 2025, the company secured upgrades from three major agencies, with Fitch and S&P Global Ratings both elevating Teva to BB+ from BB, while Moody's revised its outlook to positive from stable. The upgrades reflect Teva's progress in reducing gross debt to $16.8 billion and net debt to $13.3 billion, down from $14.5 billion previously, putting the company on track toward its target of achieving a debt-to-EBITDA ratio of 2.0 by 2027.
Despite the strong results, Teva provided full-year 2026 guidance that appeared conservative relative to analyst expectations. The company projected non-GAAP EPS of $2.57 to $2.77 on revenue of $16.4 billion to $16.8 billion. While the earnings guidance sits below 2025's $2.93 per share, analysts remained largely bullish, noting that management has a history of setting conservative targets.
Analysts at Jefferies identified Teva as a "top 2026 idea" and raised their price target to $40 per share, while JPMorgan increased its target to $35 and Bank of America to $32. The consensus price target among analysts sits at approximately $35.32, representing upside from current levels. According to MarketBeat, 11 of 12 analysts covering the stock rate it a Buy or Strong Buy.
The optimism centers on Teva's pipeline, which Francis described as "positioned to unlock significant value potential." Late-stage assets include olanzapine LAI for schizophrenia, duvakitug (an anti-TL1A therapy) for inflammatory bowel disease, and an anti-IL-15 program. Management estimates these pipeline assets could represent more than $10 billion in commercial opportunity.
AUSTEDO continues to be the star performer, generating $2.26 billion in global revenue for 2025, up 34 percent year-over-year. In the U.S. market, AUSTEDO sales reached $725 million in the fourth quarter, a 40 percent increase from the prior year. The drug has benefited from the 2024 approval of AUSTEDO XR, a once-daily formulation that Teva says has "unlocked trapped value." AJOVY also maintained momentum, reaching $673 million in global sales for 2025, while UZEDY surged 63 percent to $191 million.
Looking ahead, Francis described 2026 as a "milestone-rich year" with multiple late-stage pipeline readouts anticipated in immunology and neurology. The company expects continued progress toward its 2027 financial targets, which include achieving 30 percent non-GAAP operating profitability and generating $2.7 billion in free cash flow.
The earnings report arrives as Teva works to execute a $700 million cost savings program, which has included approximately 3,000 job cuts globally, or about 8 percent of its workforce. The company expects two-thirds of those savings to be realized by 2026.
Teva's stock, which has gained more than 160 percent over the past year, is trading at a trailing price-to-earnings ratio of 52.69 but a more modest forward multiple of 11.31. Shares are hovering near their 52-week high of $33.42, having rebounded from a low of $12.47 earlier in the year. Institutional investors hold approximately 58.5 percent of shares outstanding.