Teva Pharmaceutical’s 2016 Valuation Compared to Peers



Teva Pharmaceutical’s valuation multiples

On August 17, 2016, Teva Pharmaceutical (TEVA) was trading at a forward PE (price-to-earnings) multiple of about 8.5x. Since January 1, 2016, the company has traded at PE multiples of 7.9x–11.0x.

Currently, Teva is trading at higher PE multiples than its peer Mylan (MYL). However, it’s trading at discounted valuation multiples compared to other generic players such as Pfizer (PFE) and Akorn (AKRX).

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Targeted acquisitions

Investors can expect Teva Pharmaceutical’s valuation multiples to gradually rise due to the company’s strategy of supporting strong organic growth and targeting acquisitions across multiple geographies.

On August 2, 2016, Teva successfully completed the acquisition of Allergan Generics. On August 3, 2016, it announced the acquisition of Allergan’s Anda, a distributor of generic pharmaceuticals. This should enable Teva to realize significant operational and cost synergies in the future.

On April 1, 2016, Teva Pharmaceutical and Takeda Pharmaceuticals entered into a joint venture to form Teva Takeda Yakuhin. This is part of Teva’s strategy to strengthen its footprint in the Japanese generics market.

On March 3, 2016, Teva completed the acquisition of Representaciones e Investigaciones Médicas, S.A. de C.V. (or Rimsa), making it one of the leading companies in Latin America. To know more about Teva Pharmaceutical’s acquisitions, please refer to How Will Teva Benefit from Its Multiple Acquisitions?

The success of Teva Pharmaceutical’s inorganic growth strategy is expected to boost the company’s share price as well as positively impact the Vanguard FTSE All-World ex-US ETF (VEU). Teva Pharmaceutical makes up about 0.29% of VEU’s total portfolio holdings.

In the next part of this series, we’ll look at analysts’ recommendations for Teva Pharmaceutical and its peers in 2016.


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