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Hikma Pharma zips higher as it upgrades full-year guidance following strong first half

Hikma now expects sales in its generics and injectables divisions to be higher than previously expected thanks to a solid first half, during which it “exceeded…expectations”

injection
The increased demand for Hikma’s injectable opioids isn’t expected to last into next year

Middle East-focused drugmaker Hikma Pharmaceuticals PLC (LON:HIK) jumped in early deals on Wednesday as it raised its full-year guidance on the back of a strong first half of trading.

The Jordanian group said it “exceeded…expectations” in the opening six months of 2018 and was raising its full-year guidance for its two biggest divisions as a result.

Shares were up 9% to 1,795p shortly in mid-morning trading.

A supply shortage in the US meant Hikma sold more injectable opioids, while sales in the generics division were also better than originally forecast.

In total, the FTSE 250 group saw revenue rise 11% to US$989mln in the six months to June 30, while operating profits leapt more than 50% to US$174mln.

READ: Numis cuts Hikma to 'hold' from 'add'

“Our performance in the first half exceeded our expectations and we are pleased to be able to raise our guidance for both our Injectables and Generics businesses for the full year,” said chief executive Siggi Olafsson.

“The measures we have taken and investments we have made across the Group over the past year are delivering results, but we still have work to do.

“Our markets are competitive and we don't expect the same demand for some of our injectable products to continue into 2019.”

Alongside the results, Hikma declared an interim dividend of 12 US cents per share, up from 11 cents this time last year.

City broker ups target but repeats ‘hold’ rating

Analysts at City broker Numis said the results were “well ahead of our expectations” as they raised their price target to 1,730p, although they are still not convinced there is much upside at the moment.

“The shares have performed well in the run up to these results, and the company has delivered the beat and raise needed to justify the shares doubling over the last six months, in our view.

Our…valuation increases to 1,730p (was 1,560p), and with the shares trading, after upgrades, on 21x P/E (at 1,790p) we remain ‘hold’, with the share price reaction so far this morning (+9%) generous given the one-off nature of upgrades.”

Quick facts: Hikma Pharmaceuticals plc.

Price: 1890.5 GBX

AIM:HIK
Market: AIM
Market Cap: £4.58 billion
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