After a rough six months in which its shares have shed a quarter of their value, Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) looks ready for a rebound.
Panmure Liberum thinks the sell-off is overdone, arguing that short-term wobbles in its injectables division have been mistaken for deeper weakness.
The concern is understandable. Margins in injectables were trimmed from the mid-30s to about 32-33%, prompting fears that Hikma’s growth engine is stalling.
But Panmure reckons the issue is largely transitory, driven by currency moves, timing of product launches and competition in a handful of high-margin drugs such as calcitonin and testosterone.
The analysts still see scope for stability in the second half of 2025 and believe a solid trading update could provide the catalyst for recovery.
The branded medicines division, meanwhile, continues to outperform. Margins there came in above 30% in the first half against full-year guidance of 25%, leaving room for an upgrade if revenue momentum holds.
Over in generics, a refocused research pipeline and investment in differentiated products could lift the quality of earnings over time.
At 1,599p, the shares trade on less than 10 times next year’s earnings and yield nearly 4%.
Panmure keeps its 2,500p target and a Buy rating, seeing Hikma as one of the most attractively valued stocks in UK pharmaceuticals.