If Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) can deliver a reassuring third-quarter trading update next week, broker Panmure Liberum it could start to reverse what has been a comprehensive derating in recent months.
The main driver of the circa-30% fall between February and September has been concerns that the "growth engine" of the Injectables division is
stalling, said analyst Seb Jantet.
"While we acknowledge that recent performance has been a little lumpy and that risk is higher than normal in FY25E, we don’t think the drivers are structural in nature," he said.
"Yes, the increased risk warrants an element of derating, but a 25% decline since February’s peak feels overdone to us."
Furthermore, the analyst suggested the market has overlooked the possibility that Hikma should be largely insulated from tariffs, with the potential for the changes to increase the quality of earnings in the Rx (generics) division, as well as the value of "significant" US manufacturing footprint.
"We think the selloff has been overdone and a reassuring trading update should act as a catalyst."
The analyst reiterating his 'buy' rating and 2,500p target price, saying market fears about slowing Injectables growth were exaggerated, commenting that Hikma "trades margin for market share in order to protect its market position".