Biogen Inc (NASDAQ:BIIB) has decided to promote from within, opting to transition Chief Commercial Officer Michel Vounatsos into the role of CEO, a choice to which Cowen analyst Eric Schmidt raises a skeptical eyebrow, deeming it “curious.”

Nonetheless, the analyst reiterates an Outperform rating on BIIB with a price target of $368, which represents a just under 31% increase from where the shares last closed.

Schmidt explains his misgivings, noting, “Mr. Vounatsos has much global biopharmaceutical experience, but lacks a track record as a CEO, and appears closely aligned with Biogen’s Board. Assuming Biogen wishes to remain an independent company, we would have preferred an external hire that bolstered the company’s somewhat depleted senior management team.”

“Whereas many had thought that Biogen would seek another leader with a scientific pedigree who meshed with the company’s strong cultural identity, the Board seems to be of the opinion that Biogen has matured into a complex commercial organization, and that protecting and growing the company’s $11B revenue base is now the most important priority,” the analyst adds.

However, considering there has been rising chatter that there are BIIB Board members who intend to sell the company, Schmidt acknowledges some investors may find this to be an encouraging choice that the Board “wishes to retain very tight control” over fundamental management decisions. Conversely, the cynics will beg to differ.

When it comes to trepidation circling the biotech firm’s decision, the analyst boils his disquiet down to three chief concerns.

First, Schmidt points out that in terms of BIIB’s management team, the once mighty have fallen in the industry after a tide of departure-after-departure. From the analyst’s eyes, he comes at this from a perspective of criticism that this is ultimately “a missed opportunity to strengthen the team” by recruiting an external CEO boasting more experience.

Secondly, the analyst questions the Board’s involvement as potentially going overboard when it comes to leading the firm and worries that potential progress that could be made is now reaping negative consequences.

Thirdly, Schmidt believes if BIIB was so intent on hiring from within, he wonders why the Board did entrust Paul Clancy with the role, whom the analyst considers “as perhaps the best CFO in the history of the biotechnology sector,” commending his capital allocation success as “may be second to none.” Overall, the analyst fears that in promoting Michel to CEO, BIIB may have to bear the brunt of losing Clancy.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Eric Schmidt is ranked #118 out of 4,288 analysts. Schmidt has a 49% success rate and realizes 17.6% in his yearly returns. However, when recommending BIIB, Schmidt loses 6.1% in average profits on the stock.

TipRanks analytics indicate BIIB as a Buy. Based on 12 analysts polled by TipRanks in the last 3 months, 7 rate a Buy on BIIB while 5 maintain a Hold. The 12-month average price target stands at $335.40, marking a 19% upside from where the stock is currently trading.

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