www.alliancepharma.co.uk
Alliance Pharma plc is a United Kingdom-based pharmaceutical company. The Company is engaged in the development, marketing and distribution of pharmaceutical products. Its brands include Nu-Seals, Forceval, Hydromol, Deltacortril, Symmetrel, Syntocinon, Naseptin, Syntometrine, Synacthen and Slow-K.
Alliance Pharma a 'buy’ after trading statement, says Numis
Numis Securities has upgraded Alliance Pharma (LON: APH) from ‘hold’ to ‘buy’ after the speciality pharmaceuticals company said that recent trading had been in line with management expectations.
Fellow broker FinnCap also commented, saying that the trading statement was “short on detail” but that it retained its ‘buy’ stance while leaving its full-year forecasts unchanged.
Sales for the six months to 30 June were approximately £24.4 million, which is £1 million ahead of the first half of 2010.
As the firm has previously reported, sales of Deltacortril – Alliance’s gastro-resistant tablets that are used for a wide range of disorders (such as allergies, rheumatic disorders and autoimmune disorders) – have been affected by greater competition. But Alliance said that its promoted portfolios of dermatology and oncology products continue to grow well, particularly Hydromol (its skin care treatment) – which grew 26 percent during the first half when compared with H1 2010.
Following Alliance’s April acquisition of the brands Anbesol and Ashton & Parsons from Reckitt Benckiser, the firm said it was pleased with the demand shown for these products during its first two months of ownership.
Anbesol is used to treat mouth ulcers, teething pains and denture irritation, while Ashton & Parsons is used in infants for the symptomatic relief of pain and stomach upset caused by teething. Alliance paid £2.6 million cash to acquire the two brands.
Numis, Alliance’s house broker, said that it would maintain its 37 pence per share price target, “assuming the company can achieve 2011 and 2012 EBITDA and earnings multiples in line with its generic peers”. However, the broker added: “We believe that greater visibility on the true effect of Deltacortril issues will be needed before the shares recover substantially – we expect this at the interim results on 7 September, and again later in 2011.
Numis estimates that sales for this year will be £42.2 million, with pre-tax profit coming in at £10.6 million. For next year, it expects a slight increase in revenue to £42.9 million with pre-tax profit of £11.1 million. Earnings per share for 2011 and 2012 are expected to be three pence and 3.1 pence respectively.
FinnCap noted that a third enteric-coated prednisolone product was launched last year, which has affected sales of Deltacortril. “However, this was reflected in our forecasts for the full year,” said FinnCap, which also noted that other promoted products – such as Hydromol – “have responded well to investment in sales and marketing”.
FinnCap expects sales of £44.9 million this year, with pre-tax profits of £10.8 million (translating to EPS of three pence). For next year, it forecasts sales of £45.8 million, with pre-tax profits of £11.3 million (EPS of 3.2 pence).
