Is Teva Pharma Industries Ltd ADR (TEVA) overvalued?
On Equity Rank's model estimate, TEVA trades 56% above its fair value. Teva Pharma Industries Ltd ADR (TEVA) last closed at $42.61; the multi-method model fair value is $27.41.
| Price | Model fair value | Price vs model |
|---|---|---|
| $42.61 | $27.41 | 56% above |
What the answer rests on
- 1 of 7 valuation methods put TEVA's value above its price and 6 put it below, so the methods mostly agree.
- To justify today's price, TEVA's free cash flow would need to grow about 15.2% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 3.3% a year.
- TEVA trades at 97.3 times its last year's earnings, against a median of 19.0 for 17 profitable Pharmaceuticals companies.
- Over the past year the price sat below the model fair value on 71% of trading days. The gap ranged from 20% below to 75% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind TEVA's fair value · What prices assume · Other companies