Citi has raised its estimates for Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) following stronger-than-expected half-year results, arguing that the FTSE 100 drugmaker's valuation discount is no longer justified.
Ephrem Ravi reiterated a buy rating and set a new price target of £18.70.
The analyst lifted his group revenue forecasts for 2026 to 2030 by around 1%, reflecting roughly 90 basis points of additional constant currency growth this year alongside favourable exchange rate movements.
The upgrade is driven by higher expectations for the injectables business outside the United States and for branded medicines, the division selling to markets across the Middle East and North Africa.
Ravi also raised his operating margin assumptions by an average of about 20 basis points a year across the forecast period, reflecting the trajectory established in the first half.
Hikma shares have risen 5% since the half-year figures on 6 August, a set of results the analyst characterised as evidence of improving execution at the group.
Even after that move, the stock trades on roughly seven times forecast enterprise value to earnings before interest, tax, depreciation and amortisation for 2027, and about nine times earnings.
Both multiples sit below the average the shares have commanded since 2023, a gap Ravi described as unwarranted.
He pointed to three supports for the shares beyond the earnings upgrade.
A dividend yield of around 5% offers income while investors wait for the rating to recover.
The balance sheet is strong, giving the company financial flexibility.
There is scope for a further share buyback, which the analyst has not included in his model, meaning any announcement would represent upside to his numbers.
Hikma manufactures generic and branded medicines, with a substantial injectables operation supplying hospitals in the United States and Europe.
The shares rose 12p to 1,650p.
