Specialty pharma company Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is set to report second-quarter fiscal 2017 earnings results Thursday before the opening bell. Down more than 11% year to date and almost 40% over the past year, TEVA stock could break to the upside with top- and bottom-line beats.

Despite the punishment TEVA stock has taken, the Israel-based company, which has beaten Wall Street’s earnings estimates for 10 straight quarters, has operated far better. The fact that first-quarter revenue grew 17% year over year to $5.6 billion, lead by a 24% surge in generics revenue, was the most-recent example.

Still, uncertainties with new leadership remain. Investors have had to absorb the recent departures of both Teva’s CEO and CFO.

Nevertheless, there is now less downside risk to TEVA stock as these headwinds appear priced in. The shares have risen as much as 22.5% since reaching their 52-week low of $27.60. But for the company to sustain that renewed confidence, Teva will need to account for those gains not only with strong Q2 numbers, but also with solid outlook for the third quarter and full year.

For the three months that ended June, Wall Street expects Teva to report adjusted EPS of $1.07 per share, down from $1.25 a year ago, on revenue of $5.73 billion, which would rise 13.6% year over year. For the full year, ending in December, the company is expected to earn $4.75 per share, down 7.5% year over year, while full-year revenue of $23.43 billion would rise 7% year over year.

Last quarter the company reported adjusted EPS of $1.06, down from $1.20 a year earlier. First quarter revenue rose 17% year over year to $5.63 billion, but still missed consensus estimates of $5.68 billion. The revenue was pressured by a 4% decline in Teva’s best-selling multiple sclerosis drug Copaxone.

The results, combined with uncertainty about the company’s executives, sent TEVA stock down more than 5%.

Reasons to Bet on Teva

Nevertheless, there were tons of positives in Teva’s performance, which compelled me to recommend the stock on the decline.

TEVA stock at the time closed at $28.76 and was down roughly 20% year-to-date, with a 15% rout having occurred over the past three months. Since that recommendation the stock has rebounded as much as 17.5%, outperforming not only the S&P 500 Index, but has also VanEck Vectors Pharmaceutical ETF (NASDAQ:PPH).

It was clear that Teva, which last year acquired Actavis Generics, benefited from generics revenue, which climbed from $2.46 billion last year to $3.06 billion. Even with the recent bounce, TEVA stock is priced at just seven times fiscal 2018 estimates of $4.71 per share, suggesting that Wall Street is pricing in little-to-no growth for the next 12 months.

The combined company, meanwhile, is still on the verge of realizing synergies from the deal, which is estimated to trim some $1.5 billion in costs by the end of this year.

The obvious impact this cost reduction could have on Teva’s cash flow and the company’s ability to reduce debt will create an even stronger floor in the share price, especially given that TEVA had already cut its debt by $1.2 billion during the quarter.

Expect more of the same on Thursday: Positive news with respect to cost savings and merger synergies. Teva has already promised that it expects the sale of its Oncology and Pain business, a transaction seen closing by the end of this year, will bring in more than $1 billion.

Bottom Line for TEVA Stock

Despite what appears to be an unhealthy market for drug stocks, weighed by political pressures on pricing, TEVA stock still looks like a compelling trade.

With the shares down some 40% over the past year, investors who are looking for potential bounce-back candidate, and are willing to apply patience, can make tons of money.

While Teva, which specializes in branded and generic drug development, does face some challenges, TEVA stock continues to trade about 14% below its average analyst price target of $37, suggesting potential premiums of 15% from current levels. And that’s excellent value, when adding in the company’s 34-cent quarterly dividend that yields 4.28% annually.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.