Teva's New CEO Is A Positive Catalyst

Shares of Teva Pharmaceutical Industries Ltd (ADR) TEVA were trading higher by more than 11 percent early Monday morning after the company named Kare Schultz as its new CEO after a seven-month search period.

Schultz brings decades of experience in the pharmaceutical industry and most recently served as the president and CEO of Denmark-based H. Lundbeck A/S. The executive will move to Teva's headquarters in Israel, and his appointment is a positive catalyst that will create a floor for the stock, BTIG's Timothy Chiang commented in a research report.

Chiang upgraded Teva's stock rating from Neutral to Buy with a new $25 price target despite various challenges ahead for the generic drug maker, including a heavy debt-load. But Schultz does bring decades of relevant experience which is the "single most important item."

Looking forward, Teva's most important pipeline asset, fremanezumab, could prove to be a blockbuster product due to its more flexible dosing regimen. This, along with other generic products in the pipeline, is expected to "attract more attention" heading into 2018 and could provide a boost for the stock.

Bottom line, Teva's stock appears to be oversold, the analyst continued. The stock is trading at a PE multiple of just 4x as opposed to the group average of 9x. The stock is also trading at an EV/EBITDA multiple of 6.7x which is also a discount to the group average of 9.8x.

At time of publication in Monday's pre-market session, shares of Teva were up 12.26 percent at $17.40.

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