Generic Revlimid Fades, But Teva's Broader Generics Outlook Remains Strong

Teva Pharmaceutical (TEVA) is set to report Q2 2025 earnings, with expectations of 62 cents EPS and $4.29 billion in sales, supported by strong performance from branded drugs Austedo and Uzedy (up ~19-21% in scripts) and a 5% rebound in generics revenue. However, the company expects generic Revlimid's impact to wane post-2025 due to competition, raising analyst concerns about 2025 revenue potentially hitting the lower end of guidance. Piper Sandler maintains an Overweight rating and a $30 price target, viewing 2025 as an EBITDA low point before cost savings and a robust branded pipeline, coupled with limited loss of exclusivity until the 2030s, drive profit growth from 2026.

Analysis

Teva Pharmaceutical is approaching its Q2 2025 earnings report with consensus expectations of $0.62 in EPS and $4.29 billion in revenue, reflecting a pivotal transition for the company. The growth thesis is underpinned by robust performance in its branded drug portfolio, where year-to-date prescription scripts for Austedo and Uzedy have risen approximately 19% and 21%, respectively. This strength, combined with a 5% revenue rebound in its generics business, is crucial for offsetting the anticipated decline in contribution from generic Revlimid due to increasing competition post-2025. While an analyst has flagged the risk of 2025 total revenue hitting the lower end of the $16.8 billion-$17.2 billion guidance, Piper Sandler positions 2025 as a cyclical low point for EBITDA. The outlook for 2026 and beyond appears more favorable, with profit growth expected to be driven by significant cost-saving measures and an expanding branded pipeline, featuring five new product launches by 2027. The company's long-term value proposition is further enhanced by the absence of major loss-of-exclusivity events until the 2030s, supporting Piper Sandler's Overweight rating and increased price target of $30.

Key Decisions for Investors

• Investors should look past potential 2025 revenue softness, viewing it as a trough year for EBITDA, and instead focus on the expected growth inflection in 2026 from cost savings and pipeline maturation.
• Monitor the upcoming earnings report for sustained high-growth prescription volumes for Austedo and Uzedy, as these are the key assets offsetting the erosion of generic Revlimid revenue.
• Consider the long-term valuation case, which is supported by a lack of major patent cliffs until the 2030s and a promising pipeline, justifying the constructive analyst outlook and increased price target.