Teva Pharmaceutical Industries Limited (TEVA Quick QuoteTEVA - Free Report) reported third-quarter 2026 adjusted earnings of 86 cents per share, which beat the Zacks Consensus Estimate of 72 cents. Adjusted earnings increased 10.2% year over year, driven by strong innovative drug sales.

Revenues for the third quarter were $4.40 billion, which beat the Zacks Consensus Estimate of $4.24 billion. Total revenues, however, decreased 2% from the year-ago quarter both on a reported basis and on a constant currency basis due to lower generic product revenues.

The company’s key branded drugs Austedo, Ajovy and Uzedy continued to witness strong momentum in the quarter.

TEVA's Q3 U.S. Unit Sales

Sales in the United States segment were $1.87 billion, declining 11% year over year, primarily due to lower generic product revenues, partially offset by strong innovative drug sales. The segment’s sales slightly missed the Zacks Consensus Estimate of $1.88 billion.

Generic/biosimilar product revenues declined 39% year over year to $718 million in the United States, mainly reflecting increased competition for lenalidomide capsules, a generic version of Bristol Myers’ (BMY Quick QuoteBMY - Free Report) Revlimid. The figure missed the Zacks Consensus Estimate of $799 million.

Huntington's disease drug, Austedo, recorded U.S. sales of $727 million, up 21% year over year, driven by volume growth and improved net-price realization. U.S. prescriptions grew 18% year over year. Austedo sales beat the Zacks Consensus Estimate of $674 million.

Ajovy generated revenues of $138 million, rising 88% year over year, driven by reduced sales allowances and volume growth. Ajovy sales surpassed the Zacks Consensus Estimate of $98 million.

Uzedy (risperidone), a long-acting subcutaneous atypical antipsychotic injection for schizophrenia, generated U.S. sales of $85 million in the third quarter, up 96% year over year, driven mainly by volume growth. Uzedy sales surpassed the Zacks Consensus Estimate of $75 million.

Copaxone recorded sales of $58 million in the United States, down 8% year over year, mainly due to lower volumes. Copaxone sales missed the Zacks Consensus Estimate of $60 million.

Teva's Europe and International Markets Sales

The Europe segment recorded revenues of $1.32 billion, increasing 7% year over year on both reported and constant-currency bases. Growth was driven by higher generic product sales, increased proceeds from product-rights sales and stronger Ajovy revenues. European generic/biosimilar revenues increased 5% to $1.03 billion in the third quarter. Europe revenues missed the Zacks Consensus Estimate of $1.28 billion.

The International Markets segment generated revenues of $592 million, growing 6% year over year on a reported basis and 4% in constant currency, supported by stronger innovative drug sales. The increase was due to higher revenues from Ajovy and Austedo sales, primarily in China. International Markets revenues beat the Zacks Consensus Estimate of $581 million.

The Other segment (comprising the sales of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $613 million, up 3% year over year on both a reported basis and a constant currency basis.

TEVA's Q3 Margin Discussion

Adjusted gross margin increased 345 basis points year over year to 58.7%, benefiting from a favorable product mix, particularly higher Austedo revenues, partially offset by weaker generic sales.

Adjusted research and development expenses increased 16% year over year to $297 million, reflecting higher investment in neuroscience, immunology and biosimilars. Selling and marketing expenses rose 8% to $709 million, while general and administrative expenses declined 6% to $298 million.

Adjusted operating income increased 8% year over year to $1.39 billion. Adjusted operating margin expanded to 31.7% from 28.9% in the year-ago quarter.

Adjusted EBITDA grew 7% year over year to $1.50 billion.

Teva continues to expect an adjusted operating margin of 30% by 2027 to be achieved through cost savings and the continued growth of its branded drugs.

Teva Raises 2026 Revenue Outlook

Teva raised its 2026 revenue guidance to $16.7-$17.0 billion from $16.5-$16.85 billion, reflecting continued momentum across its innovative portfolio.

Shares of Teva were up 3% yesterday owing to the better-than-expected earnings results as well as the increased 2026 sales outlook.

Year to date, shares of Teva have rallied 34.3% compared with the industry’s rise of 13.5%.

Image Source: Zacks Investment Research

The company increased its Austedo revenue forecast to $2.55-$2.65 billion from $2.45-$2.60 billion. Ajovy guidance was raised to $930-$960 million from $850-$870 million, while Uzedy guidance was increased to $290-$310 million from $270-$290 million.

Teva raised the lower end of its 2026 adjusted EPS guidance to $1.92-$2.11 per share from the previous projection of $1.91-$2.11. The updated outlook includes a 71-cent-per-share impact from acquired in-process research and development (IPR&D) charges. Excluding the impact of acquired IPR&D, the company increased its adjusted earnings outlook by 8 cents per share at the midpoint, reflecting stronger underlying operating performance.

Adjusted operating income is now projected in the range of $3.8-$3.9 billion, compared with the earlier projection of $3.8-$4.0 billion.

Adjusted EBITDA guidance was tightened to $4.23-$4.43 billion from $4.23-$4.53 billion. Free cash flow expectations were revised to $2.1-$2.4 billion from $2.0-$2.4 billion.

Teva Advances Its Innovative Pipeline

Teva received FDA approval for Weltruza (olanzapine), a once-monthly long-acting injectable treatment for schizophrenia, in October 2026. The U.S. approval and launch of Weltruza further expand Teva’s long-acting injectable schizophrenia portfolio and build on the commercial momentum established by Uzedy. Weltruza is expected to be launched in the coming weeks.

The company expects combined peak sales of $1.5-$2.0 billion from Weltruza and Uzedy.

The FDA also accepted the new drug application for ecopipam, an investigational treatment for pediatric Tourette syndrome, with a regulatory decision expected in the first quarter of 2027.

Teva strengthened its neuroscience portfolio by acquiring BXCL-501 from BioXcel Therapeutics last month.

Earlier this week, the company announced that it will discontinue its phase II TOPAS-MSA study evaluating emrusolmin (TEV-‘286) in adults with multiple system atrophy, following a recommendation from the independent data monitoring committee based on a prespecified interim futility analysis. 

In a separate press release, Teva announced a license and commercialization agreement covering two FDA-approved immunology biosimilars: Eticovo (etanercept-ykro), a biosimilar to Amgen’s Enbrel, and infliximab-abda, a biosimilar to J&J’s Remicade. Under the agreement, Teva will obtain U.S. commercialization rights to Eticovo upon closing, while rights to infliximab-abda will transfer in the third quarter of 2027; the transaction is expected to close by the end of 2026, subject to customary conditions and regulatory approvals. The agreement expands their existing partnership and strengthens Teva’s U.S. biosimilar portfolio as part of its Pivot to Growth strategy.

TEVA’s Zacks Rank & Stocks to Consider

Teva currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech sector are TG Therapeutics (TGTX Quick QuoteTGTX - Free Report) and Tarsus Pharmaceuticals (TARS Quick QuoteTARS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, estimates for TG Therapeutics’ 2026 earnings per share have risen from 92 cents to 94 cents, while estimates for 2027 have increased from $2.65 to $2.66 during the same time. TGTX shares have surged 103.8% year to date.

TG Therapeutics’ earnings beat estimates in one of the trailing four quarters, while missing the same on the remaining three occasions, with the average surprise being 184.65%.

Over the past 60 days, estimates for Tarsus Pharmaceuticals' 2026 loss per share have narrowed from $2.41 to $2.23, while estimates for 2027 have increased from 58 cents to 64 cents during the same time. TARS shares have declined 11.3% year-to-date.

Tarsus Pharmaceuticals’ earnings beat estimates in two of the trailing four quarters, while missing the same on the remaining two occasions, with the average negative surprise being 7.63%.