Hikma Pharmaceuticals PLC (LON:HIK) has been downgraded to ‘Hold’ from ‘Add’ by City broker Peel Hunt on valuation grounds, saying upgrades to earnings forecasts have already been factored into the share price.
In a note to clients, analysts at the broker said an upgrade to the FTSE 250 firm’s full-year guidance in a third-quarter trading update last Thursday had led them to upgrade their earnings per share (EPS) forecasts to 5%-21% for 2018-2022, about 8%-23% above consensus.
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However, despite the upgrades, the broker said the strong performance indicators were already factored into Hikma’s share price, which has risen around 61% since the start of the year.
As a result, analysts said a bounce in the market may deliver an upside, but outperformance “may be trickier” given the surge, although it upped its target price to 2,000p from 1,950p.
Peel Hunt added that there was still scope for Hikma’s shares to appreciate when sentiment recovered in the wider market.
In mid-morning trading Monday, Hikma shares were down 2.9% at 1,799.5p.