Teva Bids Adieu to CEO, Gives Back October Gains

So Teva Pharmaceuticals (TEVA), how did that work out for you? That, of course, being the decision to part ways with CEO Jeremy Levin.

Teva’s decision to look for a new CEO has had a drastic effect on the maker of generic drugs. At yesterday’s close, Teva had been up 9% in October. After today’s plunge, Teva’s stock is up just 0.3% this month.

Citigroup’s Liav Abraham and team still see value in Teva’s shares. They write:

We acknowledge that the Teva investment thesis will likely be a "show me" story over the near term, as the company and its Board demonstrates to investors that (i) the company's long-term strategy for value creation remains intact; and (ii) Dr. Levin's departure does not prompt the departure of other members of the company's senior leadership team, many of whom joined the company over the past couple of years. Our thesis surrounding the attractive risk-reward profile of the company remains intact; however investors are likely to be skeptical surrounding management's ability to unlock value over the near term.

S&P Capital IQ’s Herman Saftlas, however, sees the resignation as a sign of Teva’s dysfunction. He writes:

We are disappointed by the abrupt departure of Jeremy Levin as CEO of Teva after holding that position for less than 18 months, with Eyal Desheh named interim CEO. We believe the split reflects a fundamental difference between Mr. Levin and Teva’s Board on how to deal will several headwinds facing Teva, most notably impending generic erosion and increased competition in its key Copaxone multiple sclerosis franchise (which we believe accounts for close to one third of Teva’s gross profits).

Teva has dropped 7.7% to $37.85 today at 3:23 p.m. but doesn’t seem to be spreading though the generic drug space. Taro Pharmaceuticals (TARO) ha gained 1.1% to $79, while Actavis (ACT) has gained 1.2% to $156.25 and Dr. Reddy’s Laboratories (RDY) has advanced 1% to $40.24. Mylan (MYL) has dropped 0.7% to $38.40.