Hikma Pharmaceuticals shares jumped 10 percent to 1,721p after first-half core operating profit of $405 million beat consensus by 11 percent. Both Peel Hunt and Stifel maintained buy ratings, citing the scale of the beat and an undemanding valuation.
Hikma Pharmaceuticals shares jumped 10 percent to 1,721p after first-half core operating profit of $405 million beat consensus by 11 percent.
Christian Glennie and James Orsborne at Stifel said the results should consolidate a recovery from three-year lows, describing the valuation as attractive and undemanding.
Adjusted earnings per share of 128 cents beat consensus by 14 percent. Revenue rose 4.3 percent to $1.73 billion against a $1.71 billion consensus, a beat of about 1 percent. The gap between a small revenue beat and a large profit beat is what moved the shares.
Both brokers traced most of the outperformance to the Injectables division, where revenue of $685 million came in slightly light but the operating margin held at 27.6 percent, comfortably above the 26.7 percent consensus. Peel Hunt noted the margin outperformance came despite lower sales, with management flagging a second-half weighting to the division's growth. The division supplies generic injectable medicines across the US, Europe and the Middle East, and management expects growth to accelerate in the second half.
Stifel put the standout in Branded, where revenue grew 15 percent to $502 million and operating profit rose 23 percent to $163 million. That took the division's margin to 32.5 percent, which Stifel called a multi-year high, though the broker cautioned some of it reflected operating costs delayed into the second half. The two houses report the Branded margin differently, with Peel Hunt putting it at 23 percent.
Hikma left full-year guidance unchanged at 2 to 4 percent revenue growth and core operating profit of $720 million to $770 million. The only change was to Branded, now expected at the top end of its previous 6 to 8 percent growth range. Management also flagged preparations for potential US tariffs on generic drug imports, a factor that could pressure margins in the second half.
Stifel has a 1,700p target price, implying limited upside from the current level, while Peel Hunt sits higher at 1,880p. The shares trade on 9.3 times this year's earnings with a 4.2 percent dividend yield, a persistent discount to UK healthcare peers including AstraZeneca and GSK. They remain 18 percent lower over 12 months.
The profit beat and maintained buy ratings from both brokers point to the market beginning to price in a recovery from three-year lows. Investors will watch the second-half Injectables performance, the Branded margin trajectory and any tariff-related cost impact on US generic operations.
This article is for informational purposes only and does not constitute investment advice.
