Jefferies International calls the floor on Hikma Pharma shares following profit warning slide

07:34 EDT 21 Aug 2017 | Proactive Investors

Jefferies International is “calling the floor” for Hikma Pharmaceuticals PLC (LON:HIK) after a recent profit warning saw a share price slide by the generic drugs maker, upgrading its rating to ‘hold’ while cutting its target price. Hikma shares dropped nearly 15% in value last week after the company with half year results on Thursday lowered guidance for sales of its generic products and warned of an “increasingly challenging environment”. READ: Hikma sounds the earnings alarm sending shares crashing In a note to clients today, analysts at Jefferies raised their rating for the FTSE 250-listed firm from ‘underperform’, while chopping their price target back to 1,045p from 1,390p. In late morning trading, Hikma shares were 2.4%, or 27p higher at 1,146p. The US broker’s analysts said that  following the first-half numbers they have chopped that full-year earnings per share forecasts for Hikma by around 35%, taking a cautious approach to the base business but also stress testing the bear case by removing the group’s Gx Advair respiratory product from its model “given ongoing uncertainty.” They said, however, they  “believe this base case lowers modelled intrinsic risks and gives optionality on Gx Advair, allowing us to focus on core fundamentals which we believe leaves limited downside. “We therefore upgrade to HOLD as believe fundamental drivers are now skewed to the upside.” Targets reduced by other brokers Other broker comment today remained cautious, with both Morgan Stanley and Peel Hunt cutting price targets for Hikma. Morgan Stanley’s analysts cut their target for the drugs firm to 1,350p from 1,600p and reiterated an ‘equal-weight’ stance after chopping back their forecasts. In a note to clients, they said: “While consensus expectations have come down, we expect another step down following guidance downgrade for all three divisions. “Furthermore, we see short term lack of clarity on market dynamics and a path to growth for Injectables and Generics and long term lack of visibility on pricing and competition.” And analysts at Peel Hunt, which shaved 30% from its earnings forecast, lowered their price target for Hikma to 1,390p from 2,150p and stuck with a ‘hold’ recommendation.

Original Article: Jefferies International calls the floor on Hikma Pharma shares following profit warning slide


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