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Three interesting companies with female CEOs

Equities 5 minutes to read
Picture of Peter Garnry
Peter Garnry

Head of Saxo Strats

Key points:

  • Women in leadership – this equity note discusses three companies (Citigroup, Oracle, and Novonesis) with female CEOs.

  • Citigroup (Financial Services) - Led by Jane Fraser. Potential for upside due to improved economic conditions, cost-cutting measures, and high interest rates. Risks include potential economic downturn, regulatory scrutiny, and competition.

  • Oracle (Technology) - Led by Safra Catz. Potential for future returns due to cloud growth, expansion of autonomous database technology, and strategic acquisitions/partnerships. Risks include competition in the cloud market, dependence on legacy software, and integration challenges.

  • Novonesis (Biotechnology) - Led by Ester Baiget. Potential for positive returns due to growth of the bioeconomy, expansion into new markets, and increasing focus on sustainability. Risks include dependence on a few key markets, competition and technological disruption, and regulation and intellectual property.

Women in leadership

Today is the International Women’s Day which is celebrated every year on 8 March. Ida Kassa Johannesen, our Head of ESG Investments, has written a note explaining women in leadership is important, and not only from an equality perspective but also because it just makes a better company. Ida has helped updating our Women in Leadership theme basket with 8 companies that have more than 30% women in their senior leadership and has a low ESG risk score.

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Women in leadership theme basket | Source: Saxo

Three interesting companies with female CEOs

Some companies are also led by female CEOs, but are still not meeting the criteria of more than 30% of senior leadership being women. Below we are highlighting three interesting companies with powerful female CEOs. We describe the opportunities in each of the three companies including risks to consider.

Citigroup – the turnaround case

Citigroup is a large American financial services company with global operations. The bank was hit hard during the global financial crisis in 2008 and it has had trouble keeping up with its competitors. The CEO Jane Nind Fraser joined in March 2021 and has initiated many great initiatives to first shore up profitability and longer term growth. Under Fraser Citigroup has surprised on earnings many times and the P/E ratio almost doubled underlining the improved sentiment around Citigroup. Below we have listed three factors driving upside potential for Citigroup.

  • Improved economic conditions: A strong economy can benefit large banks like Citigroup by increasing loan demand and boosting fee income from investment banking and wealth management activities.

  • Cost-cutting measures: Citigroup has undertaken cost-cutting initiatives in recent years. If successful, these measures could lead to improved profitability.

  • High interest rates: While high interest rates can hurt green stocks in the short term, they can benefit banks like Citigroup by increasing their net interest margin (NIM), which is the difference between what they pay on deposits and what they earn on loans.

Below are some of the risks factors to consider before investing in Citigroup:

  • Exposure to a potential economic downturn: A recession or significant economic slowdown could lead to increased loan defaults and lower fee income for Citigroup. This could significantly impact their profitability.

  • Regulatory scrutiny: Citigroup has faced regulatory fines in the past for various compliance issues. Continued regulatory scrutiny could limit their ability to grow certain businesses or increase operating costs.

  • Competition: The financial services industry is highly competitive, with both traditional banks and fintech companies vying for market share. Citigroup needs to effectively compete on price, innovation, and customer service to maintain its position.
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Citigroup share price | Source: Saxo

Oracle – the sleeping giant

Oracle is one of the old giants for the US technology sector coming from a relational database background and software on-premise sales model. The software maker is transitioning into cloud services and other types of software outside its traditional business in databases. The company’s CEO is Safra Catz and has been with Oracle since September 2014. As one of the few female CEOs among the big companies in the US technology sector she is an important figure to inspire more women to join the technology sector. Oracle has also done very well under her leadership and below are three potential drivers of future returns for Oracle.

  • Cloud growth: Oracle has been aggressively pushing its cloud computing services (Oracle Cloud Infrastructure - OCI) to compete with Amazon Web Services (AWS) and Microsoft Azure. Growth in OCI adoption could be a significant revenue driver. Businesses are increasingly migrating workloads to the cloud, and if Oracle can capture a larger share of this market, it would translate to positive financial results.

  • Expansion of autonomous database technology: Oracle's Autonomous Database is a self-driving, self-patching, and self-tuning database platform. This technology can significantly reduce database management costs for businesses. Wider adoption of this technology could attract new customers and solidify Oracle's position in the database management space.

  • Acquisitions and strategic partnerships: Oracle has a history of strategic acquisitions that expand its product portfolio and market reach. Similarly, successful partnerships with other tech companies could open new doors for Oracle, allowing them to offer more comprehensive solutions to their customers.

Below are some of the risks factors to consider before investing in Oracle:

  • Competition in the cloud market: Amazon Web Services (AWS) and Microsoft Azure are dominant players in the cloud computing market. Oracle needs to keep pace with their innovation and potentially lower pricing to win over customers.

  • Legacy software dependence: A significant portion of Oracle's revenue comes from traditional, on-premise software licenses. The shift towards cloud-based solutions could threaten this revenue stream if Oracle isn't successful in transitioning customers.

  • Integration challenges: Migrating to a new cloud platform can be complex and time-consuming. Oracle needs to make it easy for customers to integrate their existing Oracle products with OCI, or they risk losing them to competitors.
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Oracle share price | Source: Saxo

Novonesis – biosolutions for the future

Novonesis, formerly Novonesis, has just finished the integration of Chr Hansen creating a global giant in enzymes, functional proteins, and microbes. The company is transforming itself from previously being perceived as a chemical company to a biosolution company that can underpin a healthier way of how the world produces and consumes. Novonesis is led by CEO Ester Baiget since February 2020 and he leading the big transformation into the future of biosolutions. Performance has been bumpy since Baiget took over just as the pandemic broke out and inflation has cooled demand for many of the end products that uses Novonesis solutions in its manufacturing lowering the growth rate. But as inflation has come down and the world has not slipped into a recession demand is coming back and the repositioning as a biosolution company is changing investor perception. Below we have listed three factors that might led to positive returns in the future:

  • Growth of the bioeconomy: The bioeconomy refers to the use of biological resources to produce products and services. As the world strives for a more sustainable future, the bioeconomy is expected to grow significantly. This could lead to increased demand for Novonesis' enzymes and biotechnologies, which are used in various bio-based production processes.

  • Expansion into new markets: Novonesis is currently a leader in the enzyme market for bioethanol production. However, the company is actively developing enzymes for other applications, such as bioplastics, advanced biofuels, and next-generation detergents. Success in these new markets could create significant revenue streams for Novonesis.

  • Increasing focus on sustainability: Consumers and businesses are becoming increasingly environmentally conscious. Novonesis' products can help companies improve their sustainability profile by reducing their reliance on harsh chemicals and fossil fuels. This trend could drive demand for Novonesis' solutions across various industries.

Below are some of the risks factors to consider before investing in Novonesis:

  • Dependence on a Few Key Markets: Novonesis currently derives a significant portion of its revenue from the bioethanol industry. A slowdown in this sector, due to changes in government policies or competition from alternative fuels, could negatively impact Novonesis’ financial performance.

  • Competition and Technological Disruption: The biotechnology sector is constantly evolving, and new players may emerge with innovative solutions that could threaten Novonesis' market share. The company needs to stay at the forefront of research and development to maintain its competitive edge.

  • Regulation and Intellectual Property: Novonesis relies heavily on its intellectual property (IP) for its competitive advantage. Changes in regulations or challenges to their patents could limit their ability to develop and commercialize new products.
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Novonesis share price | Source: Saxo

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