With very little negative news specifically on it, Teva Pharmaceutical Industries Limited (NYSE: TEVA) is having a very poor December showing on the stock market. TEVA stock started the month at $22 but closed recently at $14.59.

Weak stock markets, a vow from major drug companies to raise prices on Jan. 1, and renewed government scrutiny over generic drug price fixing are taking a toll on Teva stock.

At fresh 52-week lows and unbelievably low valuations, is Teva a buy yet?

Stock at a Deep Discount

Per Simplywall.st, Teva has a future cash flow value of $29.29 which implies the stock is trading at a 48% discount. By selling off the stock, markets signal a lack of confidence in the company’s cash flow generation.

This negative view is misguided. In its third quarter, Teva reported revenue of $4.53 billion and free cash flow of $0.7 billion. It did lose $0.27 a share (GAAP) but it also reported a few strong data points.

Copaxone market share held steady in the U.S. in the quarter. Generic revenue in North America remained stable from last quarter. On the balance sheet, Teva managed to cut its debt by $0.8 billion, to $27.6 billion.

That the debt is above its market cap (of $16.1 billion) gives some bears a reason to cast doubt on the company’s recovery plan. Yet an approval and launch of AJOVY and growth in AUSTEDO assure cash flow growth continues in 2019.

Investigation of Generic Suppliers

WaPo’s report on an antitrust lawsuit involving at least 16 companies and 300 drugs is weighing heavily on Teva stock. If found guilty, Teva might get a hefty fine or may face regulatory hurdles that would disrupt its generic drug business.

It also casts a negative light on the firm’s ongoing troubles with its Actavis Generics acquisition, which cost $40.5 billion. Unfortunately, 2015 marked the peak in euphoria for drug stocks and Teva bought an asset at the highest price point.

Berkshire Hathaway Holds TEVA Stock

Berkshire Hathaway’s (NYSE: BRK.A) holding 43.2 million shares of Teva stock  is looking worse by the day. That the famous value investing fund holds the stock is not the main reason that investors should mimic the trade.

Still, if Teva is successful in minimizing the damage from the government probe in generic manufacturers, the stock might attract buyers again. Plus, Teva management continues on a turnaround path that will lead to better cash flow, reduced debt, and higher revenue.

Rich Pipeline

Teva expects EMA action in the first half of 2019 for AJOVY, the drug approved in the U.S. for the preventative treatment of migraines. Long-term Phase III trials are ongoing for fasinumab after it announced positive results with its partner, Regeneron Pharmaceuticals (NASDAQ: REGN).

U.S. approval of AP versions of the EpiPen and EpiPen Jr. auto-injectors should help alleviate the shortage of the drug, benefiting both patients and Teva.

Collectively, the U.S. generics, U.S. Specialty, Canada and Anda will bring in $9 billion in revenue for Teva this 2018 year.

As Teva consolidates its U.S. market at a 14% market share and 24% in Canada, the company will be in a strong position for 2019. Having stable drug pricing and demand predictability will benefit shareholders by alleviating uncertainties.

Risks

Although Copaxone market share held steady, as mentioned previously, revenue continues to slide. It fell by half from last year but sales may stabilize as transcription volume holds steady at around 10,000 per week.

Your Takeaway

At 5.3 times forward P/E and hovering at 52-week lows, investors sold Teva stock to book the loss for 2018. So for those who are not yet holding the stock, it is time now to consider it.

Clearer pricing and product demand ahead will bring stability to quarterly results, helping to remove uncertainties that could potentially hurt the stock any further.

Disclosure: the author does not own shares in any of the companies mentioned.