America's Most Beloved Pharmaceutical Stock Is Israel's Teva

  • Teva has received 20 ''buy'' recommendations from analysts
  • Goldman upgraded Teva this week, citing Copaxone resilience

The most popular big pharma stock on Wall Street is from Israel.

Teva Pharmaceutical Industries Ltd. has received 20 “buy” recommendations, the most among U.S.-listed pharma and biotech companies with a market capitalization exceeding $20 billion, according to data compiled by Bloomberg. Even Allergan Plc, which is getting purchased by Pfizer Inc. in the biggest acquisition of the year, has one less "buy" recommendation.

Teva, the world’s largest maker of generic drugs, is also the sixth-cheapest company, the data show. The Petach Tikva, Israel-based company is fending off competition to its best-selling medicine and is close to completing a $41 billion acquisition of Allergan’s generics unit, announced before the Pfizer deal.

Jami Rubin, an analyst at Goldman Sachs Group Inc., upgraded Teva to a buy this week, saying the company will be little affected by drug pricing scrutiny in the U.S. Teva’s top-selling drug, the multiple sclerosis injection Copaxone, may be more resilient than previously expected, Rubin also said.

“Most of Teva’s base business is not exposed to large price increases, setting it apart from other specialty pharma names accused of ‘price gouging’,” Rubin wrote in a note on Sunday. “While we continue to model a declining franchise as there are multiple generic filers for Copaxone which could change the industry dynamics -- only one generic on the market today -- we now believe the Copaxone franchise will face more muted generic erosion.”

The market welcomed Teva’s Allergan deal, sending Teva’s American depositary receipts to a record high of $72 on July 27, the day the company announced the acquisition. Since then, Teva has tumbled 13 percent as debate over drug prices in the U.S. made investors skittish.

Teva’s price-to-earnings ratio of 11.04 ranks it among the cheapest stocks in the industry. That has prompted analysts to revise their recommendations. The percentage of bullish analysts reached the highest in more than three years, with 69 percent recommending Teva as a buy.

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