It has not been a good time of late for drugs companies of all shapes and sizes, but if anything, the smaller specialist players have just kept themselves as the favoured companies in the space.
However, for Teva, it would appear it has been hit on both sides of the argument, not big enough to have critical mass on the international stage, and so far not aggressive enough to reposition its business. When you add in its issues in terms of the opioid witch hunt in the US, and reports of hedge fund shorting, and it is no surprise that the stock is at the lows. It gets worse, as Barclays, with its latest review of generic drugs makers has decided that Teva is rated Underweight, and Mylan (MYL) deserves Overweight – an interesting spread trade.
Against such a background one would hope that a value investor / contrarian might look at Teva in a sympathetic light. Luckily, for Teva there is already someone in place, one of the best value investors around: Warren Buffett.
Recent share price weakness could mean that he increases his stake from the latest doubling down of 4.8%. Given that his Berkshire Hathaway vehicle has already taken a $300m plus loss here it may be suggested it is “committed” to this situation and may have to become even more so.
This is especially so given that we are looking at a company which is a flagship group in its native Israel, and really cannot be allowed to fail.
From a charting perspective, the June 2018 support line at $8 is certainly the level to be held, a break of which could see losses accelerate. Ideally, there will at least be a temporary positive reaction in this zone.