Teva’s Leader CEO Kare Schultz Is Playing the Restructuring Card; Louise Chen Welcomes These “Winds of Change”

Here's what Cantor's Louise Chen has to say about the recent developments at Teva's headquarters.


Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) investors are relieved to see the troubled Israeli pharma giant leaping towards restructuring to dial back on expenses and steady the biotech fortress after a volatile period. On the heels of this morning’s reveal of a corporate turnover with three leading executives now on their way out Teva’s door, shares have been firing up nearly 6%.

Cantor Louise Chen takes the news in stride, noting that “winds of change bring good news this morning and the expectation for more to come. With the intent for these structural changes and leadership shift to be set into place effective immediately, Chen writes that “the Street is viewing this as good news […] and the first step in additional cost cuts to come.”

“It is also positive that new Pres. and CEO Kare just started at Teva, and he is already implementing changes that will help ease the debt load. Teva will have more to share on its restructuring plans in mid-December (2-3 weeks). It is not clear yet if Teva will share this in a press release and conference call or press release only. 2018 guidance will not likely come until February,” highlights the analyst.

Surmising on a cautiously optimistic note that gives kudos to new CEO Kare Schultz’s leadership track record, Chen underscores: “The additional restructuring news could include headcount reductions. There have already been headlines in Globes regarding this, and we would note that Kare reduced headcount at his former firm Lundbeck […] by 25%. This was followed by markedly improved profitability at Lundbeck.”

For now, the analyst reiterates a Neutral rating on TEVA stock with a price target of $10, which represents a 31% downside from current levels. (To watch Chen’s track record, click here)

Wall Street is mostly back Chen’s neutral stance on this biotech player, considering TipRanks analytics showcase TEVA as a Hold. Based on 19 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on Teva stock, 12 maintain a Hold, while 4 issue a Sell on the stock. The 12-month average price target stands at $14.93, marking a 3% upside from where the stock is currently trading.  

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