The decision on the new CEO of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) is getting closer, and as revealed by "Globes" Makhteshim Agan Industries Ltd. CEO Erez Vigodman is the leading candidate for the job. Citi Research believes that the new CEO will be announced before Teva publishes its financial report for 2014 on February 6.
"Vigodman is the CEO of Makhteshim Agan, Israel’s largest agrochemicals company. Prior to this, he served as the CEO of the Strauss Group Ltd. (TASE:STRS), one of Israel’s largest food companies," says Citi analyst Liav Abraham. " Mr. Vigodman’s experience at Makhteshim Agan includes a turnaround of the company and a sale of its controlling stake to ChemChina."
Abraham adds, "Although investors may express some skepticism if Vigodman is selected due to his lack of experience in the pharma industry, we note his successful record in the execution of turnaround strategies at large publicly traded companies, which is relevant for Teva, as the company faces the loss of exclusivity of Copaxone and implementation of an extensive $2 billion cost reduction program."
Abraham points to Vigodman's success in turning Makhteshim around and bringing it back to profitability. "Actions he implemented at the company included the closure of production lines, global supply chain optimization, and the restructuring of operations in key geographies, such as Brazil. In 2011, he led the sale of the controlling stake of Makhteshim to ChemChina, effectively resulting in a privatization of the company and its de-listing from the Tel Aviv Stock Exchange."
Abraham also notes that Vigodman has served on Teva’s board since 2009.
Abraham says that Teva's board will likely prefer a CEO who can execute on turnaround strategy. "We do not anticipate a change in the company’s strategic plan resulting from the appointment of a new CEO, but rather a potential acceleration in its implementation, particularly with respect to the cost reduction initiatives," she concludes. She expects that most of the cost-reduction efforts will affect Teva's generics division, where operating margins are well below those of its peers.
Abraham reiterates her "Buy" recommendation for Teva with a target price of $47, compared with Tuesday's closing price of $40.08 on the New York Stock Exchange.
Published by Globes [online], Israel business news - www.globes-online.com - on January 2, 2014
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