Passing On Teva

I want to buy Teva Pharmaceuticals because they are a well run company trading at a very reasonable price. Throughout the years they have grown organically and through acquisitions, even during a very rough period for other pharmaceutical companies.

In the past acquisitions made sense because their stock traded at a premium, but currently they are trading at less than ten times 2011 earnings estimates as the stock has stumbled. I believe the best use of cash is to buy back stock but management clearly stated on the conference call that they want to use cash flow to continue to do acquisitions. While the stock will likely do well because of the low valuation I will take a pass. If management ever changes their mind I will take another look.

3 comments:

Anonymous said...

SQUEEZEEEE coming!!



told ya

Anonymous said...

i disagree. i bought a bunch the other day at about 50.

Tsachy Mishal said...

I said I think it works but its just not my type of play. i like stocks where cash is being returned to shareholders.