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December 2, 2010
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Chicago, IL – December 2, 2010 – Zacks.com Analyst Blog features: Morgans Hotel Group Co. (MHGC), Starwood Hotels & Resorts Worldwide Inc (HOT), Choice Hotel International Inc. (CHH), Orient Express Hotels Ltd (OEH) and Align Technology (ALGN).
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Here are highlights from Wednesday’s Analyst Blog:
Morgans Hotel Seeks New CEO
New York-based Morgans Hotel Group Co. (MHGC) announced that its chief executive officer (CEO) Fred Kleisner will resign upon the completion of his tenureship on December 31.
The hotel company appointed Fred Kleisner as CEO in December 2007, after his successful stint as an interim CEO since September 2007. We believe Fred Kleisner navigated Morgans Hotel through the economic slowdown and decline in leisure demand quite impressively. His experience in the hotel industry as well as dedicated service has helped the company scale new heights.
Morgans Hotel has only a month to find a suitable replacement for Fred Kleisner. The company has also appointed the executive search firm Spencer Stuart to speed up the search. Fred Kleisner has offered to extend his period of service, if the company fails to appoint the new CEO within the deadline.
Fred Kleisner boasts four decades of experience in the hotel industry. He has served companies such as Starwood Hotels & Resorts Worldwide Inc (HOT), Interstate Hotels Company, and Hilton Hotels. We expect the task of finding a candidate matching Fred’s rich experience and expertise to be rather challenging.
Morgans Hotel is a hospitality company that owns, operates, acquires, and redevelops boutique hotels primarily in the United States and Europe. Primary competitors of Morgans Hotel include Choice Hotel International Inc. (CHH) and Orient Express Hotels Ltd (OEH).
We await the appointment of the new CEO and prefer to remain on the sidelines until then. Consequently, we maintain our long-term Underperform recommendation on the stock. Morgans Hotel currently retains a Zacks #3 Rank (short-term Hold rating).
Align to Resolve Warning Letter Issue
Align Technology (ALGN) received a warning letter from the US Food and Drug Administration (FDA) on November 18 requesting additional documentation over and above its response provided earlier related to the inspection of its corporate headquarters in California (between June and August). The FDA had issued Form 483 notice containing four observations subsequent to the inspection.
Additional information sought by the agency is related to Align’s corrective actions in complaint handling and medical device reporting procedures related to the inspection.
Earlier, on August 26 and November 8, Align had updated the FDA regarding the corrective actions it had undertaken to address the issues. Thereafter, on November 22, Align had submitted a written response to the warning letter that included copies of documentation requested by the FDA.
In a meeting with the FDA, Align wants to ensure that its response (on November 22) has addressed the issues contained in the warning letter. The company is trying hard to resolve the issue quickly.
Align manufactures and markets the Invisalign system, a proprietary method for treating malocclusion, or misalignment of teeth. The system corrects malocclusion using some nearly invisible and removable appliances that help gently move the tooth to a desired final position. We hope that the issues with the FDA are resolved so that its manufacturing operations are not affected.
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