Teva CEO Departs, Perrigo Strikes Activist Deal As Generics Face Headwinds

FRESH FACES: Less bearish, Credit Suisse analyst Vamil Divan noted that the CEO change comes only a few months after the announcement that Siggi Olafsson was stepping down as President and CEO of Teva's Global Generic Medicines Group, to be replaced by Dipankar Bhattacharjee. The analyst told investors that he believes the changes underscore the difficulties Teva has faced over the past 18 months and may be "well received" as investors look for "fresh faces" to lead a potential turnaround at the company. He reiterated an Outperform rating and $41 price target on the shares.

GENERIC COMPETITION: The announcement of Teva's CEO departure comes as the company faces challenges in the generic pharma market, with a judge recently invalidating four patents for its Copaxone drug. Several Wall Street analysts believe the patents loss is another step toward generic competition.

WHAT'S NOTABLE: Today, Teva competitor Perrigo announced that it has entered into an agreement with Starboard Value, which owns approximately 6.7% of the company's shares, regarding the membership and composition of the Perrigo board of directors. Under the terms of the agreement, Jeffrey Smith, Starboard's CEO and Chief Investment Officer, Bradley Alford and Jeffrey Kindler have been appointed to the Perrigo Board, with Starboard also recommending two additional independent directors to be added.

PRICE ACTION: In morning trading, shares of Teva have dropped 3.5% to $33.13, while Perrigo's stock has gained nearly 1% to $78.60.

 

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Disclosure: None.

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