Executive Summary

• We focus on Teva’s operating profile, including key risks and opportunities across the portfolio. We analyze important on-market assets and pipeline opportunities in each product category – branded (innovative) medicines, generics and biosimilars.

• We expect Teva to deliver low-single digit revenue growth going forward, though 2026 may be a challenging year due to generic competition for gRevlimid. Future growth will be driven by uptake for certain on-market branded assets as well as new launches in complex generics and biosimilars.

• We expect growth in adjusted EBITDA to be moderately stronger, likely in the mid-single digits, reflecting benefits from product mix and cost reduction efforts. We anticipate annual net FCF of $2 bn+ (and growing), allowing for incremental deleveraging and the attainment of investment grade ratings (sometime in 2027).

Relative Value

The rating agencies have come around on Teva following numerous legal resolutions (i.e., opioids, price fixing, FCA violations, etc.). Moody’s and Fitch each upgraded Teva one notch to Ba1 and BB+, respectively, in May 2025. S&P also raised its outlook to positive on Teva’s BB rating in late 2024. The agencies generally guide to leverage being maintained/sustained 0.3-0.8x below current levels as thresholds for additional upgrade (though S&P’s upgrade would likely be to BB+). We see this deleveraging range as achievable over the next 6-12 months. Teva’s management team remains highly committed to IG upgrades with effectively all free cash flow going towards debt reduction.