Teva Earnings: Turnaround Year Ends With Strong Quarter as Sales Growth Returns

No-moat Teva Pharmaceutical Industries' fourth-quarter results were better than our expectations. Total sales rose 14.8% year over year, driven by key branded drugs and a strong performance from Europe. During the quarter, Teva also received an up-front payment of $500 million from Sanofi related to their partnership to codevelop TEV’574, an anti-TL1A asset that is currently in phase 2b trials for ulcerative colitis and Crohn’s disease. While taking this out of the equation brings down sales growth to the low single digits, we still saw healthy margin improvement. After rolling our model, adjusting our assumptions, and accounting for the time value of money, we are raising our fair value estimate to $13.50 per share from $11.50.