Alliance Pharma estimates upgraded by Numis

Numis Securities today upgraded its forecast for Alliance Pharma (LON:APH) after yesterday’s interim results from the speciality pharmaceuticals firm showed it increased its first half sales to £24.4 million from £23.4 million in H1 2010.

Numis upgraded the figures slightly, with its revenue estimate for 2011 increased by seven per cent to £43.3 million but leaving pre-tax profit unchanged at £10.7 million. Its new earnings per share estimates for 2011 and 2012 have been increased to 3.3 pence for both years, while its dividend estimate for 2011 has been upped to 0.75 pence per share (from 0.64 pence).

Yesterday, Alliance reported that its operating profit for the first six months to June 30 was £7.8 million, compared with £9 million in H1 2010, while pre-tax profit was greater at £7 million (H1 2010: £6 million). Earnings per share came in at 2.21 pence (H1 2010: 1.79 pence) while the firm also declared a 47 per cent increase in its interim dividend to 0.25 pence per share.

The firm said that results for H1 2011 had inevitably been affected by the slowdown in sales of its Deltacortril enteric-coated gastro-resistant tablet that is used for a wide range of disorders; Deltacortril is facing increased competition after Teva launched a rival product product last autumn. But Alliance pointed out that the results show how profits it has enjoyed from Deltacortril during the past two years have been put to good use, with the firm investing in expanding its brand portfolio while also reducing debt.

Dermatology and oncology portfolios are both growing well, Alliance added, which is reflected by underlying sales growth of 29 per cent. 

The firm said that despite market changes affecting Deltacortril 2011 is “still expected to be the second-best year in Alliance’s history” since the underlying business continues to grow well.

“We are pleased to have delivered growth in sales and pre-tax profits in the first half of the year despite the additional Deltacortril competition,” said Alliance’s chairman, Michael Gatenby. “The 47 per cent increase in dividend demonstrates our continued confidence in the long-term cash-generating ability of our business.”

Alliance also announced another acquisition yesterday, to add to its acquisitions of Anbesol and Ashton & Parsons in April. It has bought the UK marketing rights to six products from Beacon Pharmaceuticals for £2.4 million.

Today, Numis commented: “Deltacortril’s woes have continued, with increased competition, price erosion and a market slowdown in coated prednisolone. However, the company's H1 presentation was highly transparent about this issue, which should engender confidence in the management team.”

Numis has retained its ‘buy’ rating and its 37 pence price target for the shares.