TEVA Beats on Q1 Earnings, Expects $700M Cost Savings by 2027, Stock Up

Teva Pharmaceutical Industries TEVA reported first-quarter 2025 adjusted earnings of 52 cents per share, which beat the Zacks Consensus Estimate of 47 cents. Adjusted earnings rose 8% year over year, driven by higher operating profits.Revenues for the first quarter were $3.89 billion, which missed the Zacks Consensus Estimate of $3.97 billion. However, total revenues rose 2% from the year-ago quarter on a reported basis and 5% on a constant currency basis.Top-line growth was driven by higher revenues from generic products globally and strong growth from branded drugs, Austedo, Ajovy and Uzedy, partially offset by lower revenues from the sale of mature innovative product rights in 2024. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Generics, Austedo Drive TEVA’s U.S. Unit’s SalesSales in the United States segment were $1.91 billion, up 11% year over year, driven by higher revenues from generic products as well as branded drugs, Austedo and Uzedy. The segment’s sales beat the Zacks Consensus Estimate of $1.87 billion as well as our model estimate of $1.79 billion.Generic/biosimilar product revenues rose 5% from the year-ago period to $849 million in the United States, driven mainly by the launch of Simlandi, a generic version of AbbVie’s ABBV Humira and higher revenues from the generic version of Revlimid. Generic revenues missed the Zacks Consensus Estimate of $876 million but beat our model estimate of $829.0 million.Simlandi, Teva’s biosimilar version of AbbVie’s blockbuster drug, Humira, was approved in February 2024 and launched in May. Teva has a strong biosimilar portfolio, which includes high-value complex generics like Simlandi and Selarsdi. Selarsdi is a biosimilar version of J&J’s JNJ Stelara that was approved in April 2024 and launched in February 2025 per settlement terms with J&J. Simlandi and Selarsdi are the first two biosimilars to launch in the United States under the Teva and Alvotech strategic partnership, which includes nine products.Between 2025 and 2027, Teva expects to launch another five biosimilar products, subject to FDA approval. Biosimilar versions of Amgen’s Prolia, Regeneron’s Eylea and J&J’s Simponi are under review in the United States.Teva and partner Samsung Bioepis’ Epysqli, a biosimilar version of AstraZeneca’s Soliris, was launched in the United States in early April. Teva entered into a strategic partnership with Samsung Bioepis in January 2025 for the commercialization of Epysqli in the United States.Huntington's disease drug, Austedo, recorded sales of $396 million in the United States, up 40% year over year. Sales were mainly driven by volume growth as prescription trends continued to grow. Austedo sales beat the Zacks Consensus Estimate of $361.0 million as well as our model estimate of $383.9 million.Ajovy recorded sales of $53 million in the quarter, up 18% year over year, driven by volume growth. Ajovy sales were in line with the Zacks Consensus Estimate and slightly beat our model estimate of $52.1 million.Uzedy (risperidone), a long-acting subcutaneous atypical antipsychotic injection for the treatment of schizophrenia, generated sales of $39 million in the first quarter compared with $43 million in the year-ago quarter.Copaxone recorded sales of $54 million in the United States, up 79% year over year, mainly due to a reduction in sales allowance, which offset the negative impact from generic erosion and increased competition. Copaxone sales beat the Zacks Consensus Estimate of $32.4 million as well as our model estimate of $25.0 million.TEVA’s Europe and International Market Units Miss EstimatesThe Europe segment recorded revenues of $1.19 billion, down 6% year over year on a reported basis. Sales were down 2% on a constant currency basis, mainly due to lower revenues from Copaxone and the sale of mature innovative product rights in 2024. Europe revenues missed the Zacks Consensus Estimate of $1.25 billion as well as our model estimate of $1.26 billion.In the International Markets segment, sales declined 2% year over year to $582 million. In constant currency terms, sales increased 5% year over year, driven by higher revenues from generics and Ajovy, partially offset by regulatory price reductions and generic competition for off-patented products in Japan. International Markets revenues missed the Zacks Consensus Estimate of $616.0 million as well as our model estimate of $641.8 million.The Other segment (comprising the sales of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $130 million, up 2% year over year on both reported and constant currency basis.TEVA’s Guidance for 2025Teva expects total revenues in 2025 to be in the range of $16.8–$17.2 billion versus the prior expectation of $16.8–$17.4 billion.Teva raised the lower end of its expectation for Austedo from $1.90-$2.05 billion to $1.95-2.05 billion. Ajovy, Uzedy and Copaxone guidance was maintained at $600 million, $160 million and $370 million, respectively.Teva expects adjusted EPS to be in the range of $2.45-$2.65 per share in 2025, compared with the prior expectation of $2.35-$2.65.The company expects adjusted operating income in the band of $4.3-$4.6 billion compared with the prior expectations of $4.1-$4.6 billion in 2025. Teva expects adjusted EBITDA in the range of $4.7-$5 billion compared to prior expectations of $4.5-$5 billion.TEVA Expects $700M in Cost Savings by 2027Teva also reaffirmed its targets for 2027. Teva expects an adjusted operating margin of 30% by 2027 to be achieved by cost savings and the continued growth of its branded drugs. Along with the earnings release, Teva announced that it expects approximately $700 million of net cost savings (after reinvestment in business) by 2027. Roughly half of the planned $700 million savings are expected to be realized in 2026, with the remainder being realized in 2027. Gross margins are expected to be between 57% and 58% by 2027, while operating expenses are expected to be in the range of 27% to 28% of revenues. Teva expects $2.5 billion in sales for Austedo in 2027Our Take on TEVA’s Q1 ResultsTeva’s first-quarter results were mixed as it beat estimates for earnings but missed the same for sales. Teva’s generics business sales rose 3% in the quarter, driven by growth across all regions. Ajovy registered growth of 26% globally on a constant currency basis, driven by improving market share in all regions. Austedo global sales rose 39%, driven primarily by the United States.Teva slightly lowered the higher end of its sales guidance for 2025 while increasing the lower end of its EPS range. The updated guidance excludes any contribution from the divestiture of Teva’s business venture in Japan, which closed on March 31, 2025.Teva said that its guidance was based on the tariffs already in place and does not reflect any impact from potential tariffs on pharmaceutical imports. The company stated that it expects U.S. tariffs to have an “immaterial impact” on its profits, which are already factored into its 2025 earnings outlook. Teva’s chief financial officer, Eli Kalif, said the company is well-positioned to navigate the potential impact from the U.S. tariffs. Teva’s positive comments about the tariff impact, the slightly increased earnings outlook for 2025, and the details on the planned cost savings seem to have impressed investors, despite the mixed first-quarter results and narrowed revenue outlook for the year.Teva’s stock rose more than 9% on Wednesday in response.So far this year, shares of TEVA have declined 20.1% compared with the industry’s decline of 17.6%.Image Source: Zacks Investment ResearchTeva plans to separate its API unit into a standalone business unit. However, along with the earnings release, the company announced that there was no assurance of a potential spin-off timing or that a transaction would at all be agreed or completed.TEVA’s Zacks RankTeva currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Teva Pharmaceutical Industries Ltd. Price and Consensus Teva Pharmaceutical Industries Ltd. price-consensus-chart | Teva Pharmaceutical Industries Ltd. 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