Does Teva Pharmaceutical's New Executive Hint At A Coming M&A Deal?

In a report published Monday, Citigroup analyst Liav Abraham hypothesized that

recent hire of Timothy Wright as Head of Business Development suggests that a "material, potentially "transformative transaction is not off the table." Abraham noted that Wright is considered well connected in the pharmaceutical industry and was well regarded at his previous executive role at Covidien. The hiring "augments" the company's capabilities and connections on the branded side of the business and follows the appointment of generics industry veteran Siggi Olafsson in mid-2014. The analyst continued that his "core tenet" of his "constructive stance" on Teva is supported by a floor earnings per share of $5, undervalued pipeline potential and the potential for greater cost efficiencies, inorganic growth (to diversify away from Copaxone) and generate near-term top and bottom line growth and multiple expansion. Abraham also noted that the company's balance sheet is under-levered with its debt to EBITDA ratio at less than two. As such, the company has the capacity to increase its balance sheet leverage by more than $15 billion of debt but any potential material transaction would require "significant integration" along with cost cutting initiatives, executing on synergies and capacity rationalization. Shares remain Buy rated with a $70 price target.