Teva Pharmaceutical (TEVA) is "junk."

A least that's what Fitch says about its credit rating. Teva stock is down 2.25% to $12.13 in early Tuesday trading after the rating agency cut its debt by two levels to BB from BBB-. Despite the decline, shares are still about 10% above the stock's 52-week low of $10.85 made earlier this month.

The news just adds more pain on top of what has already been a tough year for Teva. The generic drug maker was down ~66% as of Monday's close and almost 70% over the past 12 months. What's left of it now?

The company's debt load took on massive strain when it made a roughly $40 billion deal with Allergan (AGN) to buy the latter's generic drug business. However, it's left Teva with a $12.5 billion market cap after its year-long decline and a debt pile standing near $35 billion.

This is causing "significant operational stress," Fitch said. Moody's and Standard & Poor's have both assigned Teva its lowest level of investment-grade ratings, according to Bloomberg. All three sport negative outlooks on the company.

Earlier this month -- when Teva stock plunged 20% to new 52-week lows -- the company slashed its guidance for revenue, earnings and operating cash flow. The results were bad and there's no other way to put it. With Allergan holding a stake in Teva (from its cash/stock deal) and looking to sell, new lows are possible.

How far could it fall? According to HSBC analyst Steve McGarry, a near-50% fall is still on the table. He cut his price target all the way down to $6 from $26 and downgraded the stock to reduce. Margin compression, lack of earnings growth and an "over stretched" balance sheet were the drivers behind the downgrade. Teva is a risky investment, he argues.

Allergan is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AGN? Learn more now.

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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.

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