Vectura Group PLC (LON:VEC) has been downgraded to ‘neutral’ from ‘buy’ by analysts a Citi, who said they believed the company’s current valuation “looks fair” after a strong share price performance following a recent trading update earlier in January.
On January 12, the pharmaceuticals firm said sales and profits for 2020 will be better than the market expects, after the approval of a generic version of asthma drug Advair in December.
READ: Vectura hikes guidance after approval of a generic Advair and CDMO wins
Moreover, the drug formulation specialist said it has won 18 contracts under its inhalation contract development and manufacturing organization (CDMO) strategy, with roughly £3mln of revenue from this new business being recognised in the second half of the year.
“With strong recent performance (30% in 6 months) driven by the CDMO strategy, successful Ellipta litigation and approval of gAdvair (15% royalty), we believe the current valuation looks fair in the context of the recent trading update”, Citi said in its note on Friday.
However, the bank also noted a predicted “slowdown” in stock of the company’s Flutiform inhalers, which it said reflects “a permanent reduction in customer stocking and slowdown in growth, particularly in Japan”.
On this balance, Citi also reiterated its price target for Vectura at 130p.
Meanwhile, shares in the firm were down 1.8% at 123.4p in late-morning trading.