We recently published a list of Top 9 Healthcare Stocks to Buy According to Billionaire David Einhorn. In this article, we are going to take a look at where Teva Pharmaceutical Industries Limited (NYSE:TEVA) stands against other top healthcare stocks to buy according to Billionaire David Einhorn.
Wall Street has come down crashing on President Donald Trump’s sweeping tariffs, raising the risk of a trade war that could push the global economy into recession. Major equity indexes have recorded their worst days in years, with the S&P 500 slipping back into correction territory. Amid the bloodbath, the focus is slowly turning to defensive sectors poised to shrug off the long-term effects of the trade war.
The steep sell-off in the equity markets comes on the heels of Greenlight Capital’s David Einhorn reiterating early in the year that the long-running bull run had ascended to levels beyond common sense.
“We have reached the ‘Fartcoin’ stage of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC. “Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere.”
The sentiments came on the artificial intelligence-driven rally, propelling major indices to record highs. The gains to record highs also came with expectations that the Federal Reserve would aggressively cut interest rates on inflation levels that dropped close to the recommended 2% range. Things have changed, and the risk of inflation spiking has increased amid an aggressive trade war between the US and its trading partners.
READ ALSO: Top 10 Growth Stocks in David Tepper’s Portfolio and Billionaire Ken Fisher’s Top 13 Growth Stock Picks.
Greenlight Capital, a hedge fund founded by David Einhorn, has also found itself at a crossroads amid the deep sell-off in the market. Nevertheless, the hedge fund, which specializes in value-oriented strategies, boasts of significant exposure to healthcare stocks, offering some support as investors shun risky plays amid the corrective phase in the equity markets.
Healthcare stocks tend to hold up well in recessions as demand for healthcare services remains strong regardless of the prevailing economic situation. Consequently, the healthcare sector has been down by about 4% for the year, compared to a 14% decline in the S&P 500. The outperformance comes on the heels of Goldman Sachs chief US equity strategist David Kostin reiterating healthcare stocks are the way to go as the overall equity market remains in a corrective phase.
Given that healthcare accounts for about 17% of the US economy, companies with exposure to the multibillion sectors stand a fair chance of shrugging off the pitfalls of the ongoing trade wars. That’s because the industry boasts a defensive tilt that should attract investor interest amid rotation from high-risk plays in the equity markets.
“Within the equity market, we continue to recommend that investors own the health care sector, which offers investors a defensive tilt at low valuations,” Kostin added. “Health Care has outperformed the S&P 500 by 7 pp. YTD, but the median stock still trades at an 18% P/E discount to the S&P 500, which is nearly the largest valuation discount in recent decades,” Kostin said.
Increased focus on healthcare stocks amid recession and trade war concerns comes against the backdrop of one of the most frustrating years for healthcare fund managers. Even though the fundamental aspects of the healthcare sector indicated it would surpass the overall market, it still lagged behind sectors more sensitive to economic shifts as the US economy proved to be stronger than anticipated in 2024. Additionally, the sector faced negative effects due to the US election results.
Historically, healthcare has significantly outperformed over the long haul. From 1989 to October 2024, the S&P 500 Healthcare Index yielded annualized returns of 12%, comparable to the technology sector. However, performance has been cyclical, with clear phases of underperformance and outperformance, driven by overarching market trends – like instances when all defensive sectors excel – and industry-specific catalysts.
Our Methodology
We combed Greenlight Capital SEC Q4 2024 13F filings to identify the top 9 healthcare stocks in David Einhorn’s portfolio. We then analyzed why the stocks stand out, as solid investment plays, well poised to shrug off the uncertainty triggered by recession concerns and trade war. Finally, we ranked the stocks in ascending order based on the value of Greenlight Capital equity stakes in the stocks. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up shot of various types of medicines on a table, illustrating the specialty and generic products offered by the pharmaceutical company.
Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Greenlight Capital’s Equity Stakes: $10.33 Million
Number of Hedge Fund Holders: 72
Teva Pharmaceutical Industries Limited (NYSE:TEVA) develops, manufactures, and distributes generic and other medicines and biopharmaceutical products. The company specializes in providing affordable and accessible medicines to patients worldwide. It’s long-term prospects received a significant boost late last year after results from a clinical study of its candidate drug for ulcerative colitis and Crohn’s disease, Dukakitug, met primary goals.
Following the positive results, Teva Pharmaceutical Industries Limited (NYSE:TEVA) is poised to lead the commercialization of the product in Europe, Israel and other countries. The medication may be used for purposes other than inflammatory bowel disease. Duvakitug’s successful Phase 2b research results have paved the way for more clinical trials.
Despite the anticipated sharp drop in sales from its generic version of Revlimid in 2026, analysts at Piper Sandler have emphasized Duvakitug’s potential to support Teva’s expansion. The research firm has expressed its confidence in Teva’s capacity to increase its market value due to the company’s strategic efforts and the potential of its therapeutic pipeline.
Amid the positive clinical trial results, Teva Pharmaceutical Industries Limited (NYSE:TEVA) delivered solid Q4 2024 results, which were helped by double-digit sales gains of its branded drugs for migraines, Huntington’s disease, and schizophrenia. Revenue in the quarter totalled $4.2 billion as earnings per share came in at 71 cents a share. Teva expects 2025 revenue to average between $16.8 billion and $17.4 billion with diluted earnings per share of between $2.35 and $2.65.
Overall, TEVA ranks 5th on our list of top healthcare stocks to buy according to Billionaire David Einhorn. While we acknowledge the potential of TEVA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TEVA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.