Goldman Sachs previews 2Q results for Americas generic pharmaceuticals: TEVA's post-pullback value stands out, while AMRX has bottom-line upside potential

Overview

This report is Goldman Sachs' preview of second-quarter results for its Americas generic-pharmaceuticals coverage, focusing on TEVA, VTRS, and AMRX. Goldman Sachs makes modest model updates based on the latest prescription data and recent company commentary, and broadly expects all three companies' 2Q revenue and earnings to be in line with market expectations; AMRX may deliver a bottom-line beat due to stronger margins. The report also emphasizes that clinical, regulatory, commercialization, and capital-allocation catalysts in 2H26+ will be the key drivers of subsequent sector performance.

Core views

Goldman Sachs remains constructive on the sector overall, believing that short-term macro and fund flows may create volatility, but that medium-term share-price drivers will return to earnings growth and pipeline optionality. For TEVA, Goldman Sachs believes its 1H26 event path has been relatively quiet, while geopolitical factors and valuation concerns have contributed to year-to-date underperformance; commercial and pipeline execution are reducing long-term growth risk, the 2H26+ catalyst slate is dense, and the pullback provides an attractive entry point. For VTRS, Goldman Sachs maintains Neutral, believing that improving commercial fundamentals and pipeline expectations support the share price, but that further validation of the pipeline, commercial execution, and capital allocation is needed. For AMRX, Goldman Sachs maintains Buy, believing the company benefits from generic-pharmaceutical momentum, specialty products, the PFE-partnered obesity portfolio, and the integration of Kashiv Biosciences, with potential for a 2Q bottom-line beat.

Analysis framework

The report uses a top-down comparison of sector relative performance and valuation, combined with bottom-up company model updates. Key inputs include the latest prescription data, recent company communications, comparisons between GSe and market consensus, FY26-FY28 EBITDA estimates, 12-month EV/EBITDA target multiples, recent share-price performance relative to XLV and the S&P 500, and the schedule of upcoming key clinical and regulatory catalysts.

Methodology notes

• Valuation methodsEV/EBITDA valuation methodology

  12-month target price valuation

  The target prices for TEVA, VTRS, and AMRX are all based on a 100% EV/EBITDA methodology, applying target EV/EBITDA multiples to NTM estimates.

• factor_analysisGS Factor Profile

  growth, financial returns, valuation multiples, and composite factor profile

  Goldman's Factor Profile provides investment context for individual stocks by comparing measures such as growth, financial returns, and valuation multiples with the market and industry peers.

• strategic_optionalitiesM&A Rank

  M&A probability framework

  Goldman Sachs uses an M&A framework to assess the probability that a company becomes an acquisition target and considers an M&A component in certain ratings and target prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• TEVA

  Core recommended name, rated Buy

  Strengths

  A more attractive valuation entry point after year-to-date underperformance; commercial products including Austedo, Ajovy, and Uzedy, together with pipeline assets including IL-15, LAI olanzapine, Ecopipam, DARI, and TL1A, form a 2H26+ catalyst portfolio.

  Weaknesses

  A relatively quiet 1H26 event path; the market remains concerned about geopolitical risks, the valuation premium, and the impact of Emalex expenses.

  Comparison

  Relative to VTRS and AMRX, Goldman Sachs believes TEVA offers a more attractive entry point after the pullback and has the largest implied upside to the target price.

  Risks

  Generic-drug price erosion, weaker-than-expected branded-drug growth, clinical or regulatory failure, patent litigation, and product-launch delays.

• VTRS

  Covered name, rated Neutral

  Strengths

  Significant year-to-date outperformance, benefiting from improving commercial operations, 2H26+ clinical catalysts, a valuation discount, and fund rotation; China has become an important growth driver.

  Weaknesses

  Market expectations are already relatively positive; the pace of new-product launches, Nashik plant recovery, enterprise-wide review, and progress on the CFO search still require validation.

  Comparison

  Compared with TEVA and AMRX, VTRS has less upside to the target price, and the report maintains a neutral view.

  Risks

  Price erosion, clinical or regulatory setbacks, prolonged manufacturing issues, and litigation risk; upside risks include better-than-expected business growth, pipeline success, and margin expansion.

• AMRX

  Recommended name, rated Buy

  Strengths

  Diversified growth is supported by generic-pharmaceutical commercial momentum; specialty drugs such as Crexont and Brekiya; key launches including lanreotide and lohexol; the PFE-partnered obesity portfolio; and the integration of Kashiv Biosciences.

  Weaknesses

  The share price has significantly outperformed year to date, and some positive expectations may already be reflected in market positioning.

  Comparison

  Compared with VTRS, AMRX has stronger commercial growth and margin-surprise potential; compared with TEVA, near-term earnings upside is more focused on the bottom line.

  Risks

  Generic-drug price declines, new-product execution failures, weaker-than-expected branded-drug growth, clinical/regulatory delays, and litigation- or patent-related cash-flow impacts.

Key data

• TEVA target price$5012-month target price unchanged; the currently disclosed price is $31.35, implying approximately +59.5% upside.
• VTRS target price$18Raised from $17 to $18; the currently disclosed price is $17.59.
• AMRX target price$19Raised from $17 to $19; the currently disclosed price is $18.10.
• TEVA FY26/FY27 EBITDA estimates$4.3bn / $5.7bnPreviously $5.0bn / $5.7bn; the model incorporates the 10Q, the Emalex acquisition, and the latest prescription data.
• VTRS FY26/FY27/FY28 EBITDA estimates$4.4bn / $4.6bn / $4.7bnPreviously $4.5bn / $4.6bn / $4.8bn.
• AMRX FY26/FY27/FY28 EBITDA estimates$755mn / $845mn / $924mnPreviously $759mn / $845mn / $924mn.
• Sector relative performance+18% vs XLV; +12% vs S&P 500The report states that the generic-pharmaceutical coverage group has recently outperformed both the healthcare sector and the broader market.
• AMRX year-to-date performance+34% vs S&P 500; +40% vs XLVThe report also notes recent strong performance, and market positioning may already reflect some of the positive news.

Impact & implications

For investors, the core implication of this report is that the generic-pharmaceuticals sector is no longer merely a low-valuation defensive trade; investors must increasingly assess whether earnings growth, branded and specialty-drug commercialization, clinical/regulatory catalysts, and capital allocation can be delivered. TEVA offers the most compelling risk/reward, given its substantial implied upside to the target price and dense 2H26+ catalyst slate; AMRX's near-term earnings sensitivity is more focused on margins and new-product momentum; VTRS is a more balanced position awaiting validation.

Risks

• Generic-pharmaceutical price erosion exceeds expectations, particularly due to pricing pressure in the United States or emerging markets.
• Commercialization of branded and specialty drugs falls short of expectations, including slower growth for products such as Austedo, Ajovy, Uzedy, Crexont, Brekiya, or Unithroid.
• Clinical or regulatory catalysts fail, including negative readouts, development delays, PDUFA setbacks, or approval failures.
• Patent litigation, settlement agreements, or an inability to launch products as planned could affect future cash flow.
• Manufacturing issues could weigh on full-year guidance and commercial execution at companies such as VTRS.
• Macro conditions and fund rotation could create valuation volatility across the sector, particularly following recent outperformance.
• Goldman Sachs discloses investment-banking, market-making, and other business relationships with the relevant companies; investors should assess potential conflicts of interest in conjunction with the disclosures.

What to watch

• TEVA's 2Q results on July 29, FY26 guidance, and commercial trends for Austedo, Ajovy, and Uzedy.
• TEVA's October PDUFA for LAI olanzapine, strategy following Ecopipam's FDA filing, potential Ph3 data for DARI before year-end, the TL1A PoC study, and follow-up IL-15 data.
• VTRS's 2Q results on August 6, commercial-business updates, and pipeline timelines for fast-acting meloxicam, selatogrel, and cenerimod.
• VTRS's new-product launch cadence, China-business outlook, whether the Nashik manufacturing facility returns to full capacity, foreign-exchange trends, enterprise-wide review, and the CFO search.
• AMRX's 2Q results on July 30, particularly whether margins produce a bottom-line beat.
• Updates on AMRX's lanreotide, lohexol, Crexont, Brekiya, new men's-health specialty products, the structure of the PFE-partnered obesity portfolio, and progress integrating Kashiv Biosciences.
• Whether the sector's performance relative to XLV and the S&P 500 can shift from being driven by fund rotation to being driven by earnings delivery and pipeline execution.