Analysts at Citi have revised their net present value (NPV)-based price target for Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) to £19.20 with a £28-£11 bull-bear valuation range for the stock.
In a note to clients, the analysts said: "Our Deconstructed-Buy-Thesis back in August argued the risk-reward was highly attractive, despite carrying deliberately conservative US Generics forecasts (<20% of group), due to an improving outlook at Injectables and Branded.
"We continue to prosecute this view, helped in part by takeaways from December’s Injectables CMD, and despite recent outperformance."
They added that analysis of IQVIA trends and pre-close discussions leave them comfortable that Hikma's 2022 earnings will be near the top-end of guidance.
The analysts pointed out: "The launch of gXyrem this week and further expansion of the MENA biosimilar collaboration with Celltrion are incremental positives. Updated forecasts reflect upgrades at US Generics, though note we remain extremely conservative, as well as better margin resilience at Injectables. Higher net financial charges and FX provide a partial offset."
They concluded: "Hikma offers a 11-12% FCF yield and trades on a 2024 PE and EV/EBITDA of just 10/6x."
In early trade on Thursday, Hikma shares were changing hands for 1,616.50p, up 0.7%.