15 Small-Cap Healthcare Stocks Hedge Funds Are Buying

2. Teva Pharmaceutical Industries Limited (NYSE:TEVA)

No. of Hedge Fund Holders: 72

Market Capitalization: $20.02 Billion

Analyst Upside: 31.62%

Teva Pharmaceutical Industries Limited (NYSE:TEVA) is a global pharmaceutical company that develops, manufactures, distributes, and markets generic and other medicines, and biopharmaceutical products. The company operates through three segments, including North America, Europe, and International Markets.

On May 12, JPMorgan increased its rating on TEVA from Neutral to Overweight and raised the price target from $21 to $23, highlighting Teva’s announcement of a $700 million cost-cutting initiative. According to JPMorgan, this latest initiative will significantly contribute to the company’s margin expansion goals for 2026 and 2027. This program is expected to improve Teva’s financial performance and reach a 30% operating margin target by 2027. This move will allow the company to overcome the challenges of low revenues from its drug gRevlimid and reinvest in the product pipeline.

Teva Pharmaceutical Industries Limited (NYSE:TEVA) posted mixed financial results in Q1 2025. The revenue came in at $3.89 billion, missing estimates by $97.39 million. The adjusted earnings were around $0.52, exceeding estimates by $0.06. The analysts expect the company to post revenue of around $4 billion in Q2, reflecting a 3% year-over-year growth, driven by AUSTEDO and biosimilars. However, tariffs and a drop in COPAXONE sales pose risks.

Sound Shore Management stated the following regarding Teva Pharmaceutical Industries Limited (NYSE:TEVA) in its Q4 2024 investor letter:

“Teva Pharmaceutical Industries Limited (NYSE:TEVA): Traditionally known as a generic drug company, Teva has a growing branded drug business and a promising pipeline. Following a period of poor capital allocation decisions by prior management teams, we were able to invest at a very attractive 4 times earnings and with a 20%+ free cash flow yield. New leadership has focused on execution and pipeline development, leading to upward inflection in margins and positive clinical trial results. Teva remains remarkably cheap, trading at a significant discount to its intrinsic value. (Please see our 2Q 2024 letter for a more in-depth review of Teva.)”