On Sunday, Illumina (NASDAQ:ILMN) announced that the board has accepted the resignation of its CEO of the past seven years, Francis DeSouza, signaling the path to victory for Carl Icahn. The board confirmed that SVP & General Counsel Charles Dadswell will play the interim role until the company is successful in completing its internal and external search for a new CEO. While DeSouza remains in an advisory capacity until July 31, he will vacate the office immediately.
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The stepping-down comes on the heels of activist investor Carl Icahn‘s failed attempt to drive DeSouza out of the company. That took place in the last week of May, when the gene-sequencing machine maker’s shareholders removed their board chair, John Thompson.
Icahn is pleased with the progress signaled by this resignation. On Sunday, he tweeted, “While obviously, I believe the change of CEO should have come meaningfully sooner, it is still a very positive occurrence.”
What is the Icahn Proxy Battle?
Carl Icahn, who owns a 1.4% stake in Illumina, has blamed the company’s executive management and board for neglect. His concerns are mainly related to the repurchase of cancer test maker Grail in 2021, which led to the core business depreciating. Icahn’s proxy battle commenced in March, wherein he also expressed the desire for ex-CEO Jay Flatley to return.
In an open letter to shareholders, Icahn accused deSouza of “desperately, hilariously and, most of all, unsuccessfully” trying to spin “decidedly mediocre” quarterly results during a press tour.
Illumina had spun off most of its ownership in Grail in 2017, however in 2020 it agreed to acquire a stake for more than $7B. The deal faced opposition from U.S. and European antitrust regulators.
Is Illumina a Buy Now?
Of the 13 Wall Street Analysts covering the stock, the average rating stands at Moderate Buy with 6 Buy ratings, 5 Hold ratings and 2 Sell ratings. The average analyst price target is $240.83, indicating a 20.1% upside potential. Earlier this month, SVB Securities Analyst Puneet Souda reaffirmed his Buy rating on the stock. At the time, Souda said he believes the board is moving in the right direction, and taking shareholders’ feedback seriously. It seems his premonitions were correct.
While investors might believe that the shares of ILMN will commence Monday’s trade higher, with the CEO stepping down, the possibility of a Grail exit also becomes more likely. In the past 3-months period, ILMN stock has eroded 11.6% in stock value.
