Deutsche Bank has trimmed its target price on Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) from 3,100p to 2,850p but kept a buy rating, arguing that the valuation now looks compelling despite a mixed set of first-half results.
Revenue and core EBIT came in slightly ahead of consensus, but performance in the injectables division, the part of the business that draws the most market attention, fell short by a mid-single-digit percentage.
Management cut margin guidance for injectables, although this was partly offset by a small upgrade to revenue and margin expectations in the branded medicines segment.
The changes amount to only a low-single-digit reduction in Deutsche’s full-year core EBIT forecast, leaving its estimate just below the midpoint of Hikma’s guidance range.
The bank notes that immediate catalysts for the shares may be thin on the ground but sees the fundamentals as solid.
Hikma’s long US manufacturing footprint offers some protection from tariffs, and its portfolio carries relatively high margins.
With the shares having drifted lower ahead of the results and fallen further since, now trading on about 10 times forward earnings, Deutsche points to a sizeable discount to European speciality pharma peers, which trade on more than 15 times.
For the bank, that gap is hard to ignore, making Hikma an attractive pick for investors willing to wait for the next round of growth catalysts to emerge.
The shares were up 0.8% at 1,799p.