In response to the resignation of Teva CEO Shlomo Yanai, Israeli analysts believe that its effect on Teva's shares will be positive. "We expect that the resignation announcement will have a positive effect on Teva's share price," writes IBI analyst Natalie Gottlieb. The last time that a CEO resigned from Teva (Israel Makov, five years ago) Teva's share price fell 4% that same day, but quickly corrected.
Shlomo Yanai will resign in May, and Dr. Jeremy Levin, a senior executive from Bristol-Myers Squibb, will take his place. Teva will hold a press conference at 11:30 am today, which "Globes" will broadcast live.
"We assume that the announcement about Shlomo Yanai's resignation will be a little different," Gottlieb said. "For some time now, investors have been suggesting that he should be replaced. Therefore, the timing might be surprising, but the action is not. In addition, we believe that the appointment of Dr. Levin, who is from within the industry, will be perceived positively. Dr. Levin comes from the field of innovation at a time when Teva's most important task is to successfully merge Teva and Cephalon, an innovative company. All this will add to the positive effect on Teva's share price."
Gottlieb gives Teva a "Buy" recommendation. "At levels of $40+, which is a low p/e ratio, exposure to the stock should be increased," Gottlieb said.
Clal Finance equity analyst Jonathan Kreizman also had a positive reaction to Yanai's resignation. "We believe that the appointment of a manager from the pharma field, despite the fact that he is not an Israeli, is the correct course to take. Teva will face numerous challenges in the upcoming years. Following the acquisition of Cephalon, its success in innovative drugs will be a decisive factor in its future," Kreizman said. "In this respect, the tremendous experience that Levin brings with him from Novartis and Bristol will most definitely help the company."
Published by Globes [online], Israel business news - www.globes-online.com - on January 2, 2012
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