We are going out a limb to add Teva Pharmaceuticals (TEVA) to our Healthcare model portfolio as we think the stock is a strong value at current levels; in fact, we believe the shares to be way undervalued, explains growth stock expert Todd Shaver, editor of BullMarket.com.

Through a series of acquisitions, Teva has grown into the largest generics company in the world. Poor sentiment, however, has left plenty of room for improvement.

We cannot ignore current sentiment on the stock, which remains skewed to the negative following a slew of negative news (including weak earnings reports, CEO turnover, and competition concerns) over the past 12 months, but these issues are in the past, and looking forward, we see the picture getting better.

Following the recent departure of the latest CEO, the firm needs to hire of a CEO with strong operational and pharma experience is crucial in order to restore investor confidence and unlock the attractive risk-reward profile we see in the stock.

Big time de-leveraging on the horizon. Strong cash flow generation will allow the company to continue to payout the comforting $1.36 annual dividend that yields 4.25%.

The pipeline could deliver a big upside, with its key branded pipeline assets such as fremanezumab for migraines and austedo for Huntington’s disease, a failure of the nervous system.

The stock is widely followed by Wall Street with most price targets in the high $30s or low $40s. We think the stock is worth $45 by placing the historical average 3.0% dividend yield on the current $1.36 dividend.

The company needs to take strong steps quickly in order to fix its balance sheet, replace its top management, and establish a plan to navigate the maze of challenges it needs to get through. But if the company does these things well, which is likely, then we expect Wall Street to rapidly push the stock higher.

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