How does the old saying go? Expect it when you least expect it?

Just one day after Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) issued some lackluster guidance followed by news that a competing drug had won the FDA’s approval, TEVA stock got an impressive endorsement. Warren Buffett’s Berkshire Hathaway bought $358 million worth of the beaten-down equity during the fourth quarter of last year.

The interest in the generic drugmaker doesn’t necessarily solve all, or any, of Teva’s problems. Namely, the generic drug headwind that’s working against all pharmaceutical companies is expected to drive 2018’s top line down another 16%.

And, a drug made by Novartis AG (ADR) (NYSE:NVS) that will compete with Teva’s all-important multiple sclerosis drug Copaxone was recently approved by the FDA, threatening this year’s already-lackluster outlook. Mylan NV (NASDAQ:MYL) also has a generic alternative on the market. Never even mind the fact that Teva’s bonds have been downgraded to “junk” by Moody’s.

So what, pray tell, does Buffett see in Teva Pharmaceuticals that would prompt an admittedly small purchase of 18.9 million shares of TEVA stock? It may be the old standby reason: the market may be underestimating Teva’s prospects.

Method to the Madness

Don’t look for hard news, or even subtle hints, that Teva is turning things around. Relatively new CEO Kare Schultz had a chance to sell the market on that prospect a week ago, but delivered a full-year outlook that fell short of estimates.

The pros were looking for a top line of $19.2 billion, but the company said it’s only expecting sales between $18.3 billion and $18.8 billion. The earnings outlook shortfall was even uglier. In the meantime, $32 billion worth of debt is limiting the organization’s fiscal flexibility.

Schultz is laying off 14,000 employees — about a fourth of its workforce — as a means of culling costs, and he has already suspended the dividend. The former makes it tough to keep doing business as usual, while the latter does anything but help the bullish case for Teva stock.

RBC Capital analyst Randall Stanicky said of the situation:

“The $3 billion in cost cuts through 2019 are a necessary and effective address to near-term patent cliffs. But they do not solve Teva’s growth problem, and we still think the bull case is overestimating medium-term growth given the multiyear period of lack of business-development support.”

There’s still a bullish case, however, even if a flimsy one. As Lawrence Cunningham, author of Beyond Buffett: The Enduring Value of Values, opined:

“It’s not classical Buffett, given the industry, so it’s likely the younger investors. But it’s classic Berkshire in being what some would call contrarian, though I would call it opportunistic. They invest capital in great businesses at a reasonable price, when others are negative enough to create those conditions.”

He’s absolutely right in that sense. The time to buy a stock is when it’s out of favor and nobody wants it. Waiting until everyone agrees that it’s a must-have means the bulk of any upside is in the past rather than ahead. Buffett is still a master when it comes to finding value nobody else sees.

There’s also the distinct possibility that associating the name of Warren Buffett with the struggling company could be enough to redirect an otherwise difficult undertow. Though the relationship won’t pay Teva’s bills, it can help the company raise funds if need be, and it might make the market look at Teva’s debt in a slightly less critical light.

Every little bit helps.

Bottom Line for TEVA Stock

Just because Berkshire Hathaway likes Teva well enough to own it doesn’t inherently make it worth owning for all investors. Buffett can afford to sit on it for years. Many investors can’t park money in a stock that sits idle indefinitely. Still, the fact that Berkshire Hathaway bought so much of TEVA stock is telling.

The smart-money move here is to wait. Put TEVA stock on your watchlist and be prepared to pull the trigger on a trade that could graduate into a full-blown investment if Buffett’s and Berkshire’s call turns out to be a good one.

You should also keep an open mind because the rhetoric really won’t change for the better until well after the stock’s proven it’s worthy of that bullish rhetoric. Buffett isn’t one to wait for that to happen.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.