Teva Earnings: No Sign of Slowing Down as Robust Generic and Innovative Portfolio Fuels Growth

No-moat Teva reported solid second-quarter earnings with both top and bottom line coming in above our expectations. Total sales of $4.26 billion were up 7.4% year over year thanks to robust performance from its generics business, which was up 13%. The US had a particularly good quarter, as it continues to benefit from growing generic Revlimid sales, strong innovative portfolio— Austedo (migraine drug) was up 32%—and new product launches, including generic versions of Humira and Victoza. Against a background of positive first-half performance, management raised its full-year sales and EPS guidance. Although both numbers at midpoint were raised by low single digits, momentum looks strong for the firm as it delivers its sixth consecutive quarter of organic top-line growth. We attribute this to its "Pivot to Growth" strategy as well as strong execution across the board. After updating our model and upping our outlook, we raise our fair value estimate to $17 per share from $14.50.