We believe Teva Pharmaceuticals is an attractive investment opportunity, currently trading at approximately a 25% discount to our fair value estimate of $23 per share. As one of the leading generic drug manufacturers globally, Teva boasts a growing innovative portfolio that includes several promising pipeline assets. Our valuation is supported by a no-moat rating, a projected 3% compound annual growth rate for revenue over the next 10 years, and anticipated mild margin expansion throughout our forecast period. Our fair value estimate corresponds to 9 times our adjusted EPS estimate of $2.55 for 2025.
Currently, over 60% of Teva's total revenue is derived from generics and off-patent branded drugs; however, we expect this percentage to decline as Teva’s innovative commercial drugs surpass its legacy products and as pipeline candidates successfully enter the market. The company has a robust presence in neuroscience with products like Austedo, Ajovy, and Uzedy, and we anticipate that this portfolio will be enhanced by the expected launch of olanzapine in late 2027.
Teva is also making strides in immunology with candidates such as duvakitug (for inflammatory bowel disease), a dual-action rescue inhaler (for asthma), and an anti IL-15 treatment (for celiac disease), all of which we expect to launch by 2030. We believe these initiatives will contribute to sustainable long-term revenue growth, improve profitability, and assist in reducing its $16 billion debt.
Geographically, Teva is well-positioned, with the US accounting for approximately 50% of sales, Europe 33%, and the remaining 17% from international markets. We believe that the company's commercial expertise in each market will facilitate the successful launch of both generic and branded products.
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