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Shire shares hit reverse gear after it cautions on earnings

Shire remains something of a contradiction in terms of general market attitude - said Richard Hunter, head of markets at Interactive Investor
Shire shares hit reverse gear after it cautions on earnings
The company signposted that costs may rise in 2018

Shares in speciality pharma giant Shire PLC (LON:SHP) nudged lower in afternoon trade as analysts got out the red pen in the wake of annual results.

While the figures themselves were slightly ahead of consensus, the outlook was a little weaker than number crunchers had been expecting.

READ: Shire backtracks on a key revenue target and says it plans to separate businesses

US outfit Jefferies said its EPS forecasts would require “trimming”, though it maintained its ‘buy’ recommendation and £49 a share price target.

Share price almost a third in a year

At 1.30pm, the stock, off almost a third in the last 12 months, was changing hands for £31.44, down 1.18% on the day.

Earlier, Shire said total revenues were up 32% at US$15.2bn, aided by a first full year contribution from Baxalta, which it bought for US$32bn. Net income was US$4.3bn.

However, it warned that 2018 earnings could undershoot because of higher costs.

“Shire remains something of a contradiction in terms of general market attitude,” said Richard Hunter, head of markets at Interactive Investor.

“The shares have lost some 30% over the last year as concerns persist, as compared to a drop of 0.6% for the wider FTSE100.

“Despite this underperformance the shares are clearly well regarded as a potential growth story, with the market consensus of the company as a strong buy having been in place for some time.”

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