HSBC has downgraded its recommendation on Hikma Pharma (LON:HIK) to reduce (from hold) saying that it remains concerned on the outlook for generic drug pricing.
The bank explained: “We are concerned generally on the outlook for generic drug pricing, especially in the US, where a slew of companies have reported weak results due to ongoing pricing pressure.
“Although Hikma has a proportion of higher value-added generics, the decline in Generics core operating margin from 30.5% to 5.8% is alarming.”
HSBC also pointed out that it is below company guidance on 2017 revenues and notably below consensus on reduced earnings.
Analysts left their target price unchanged at 1,800p per share.
Conversely, Peel Hunt repeated its buy rating, highlighting the pharmaceutical company’s better margins and a stronger-than-forecast balance sheet.
The broker said: “We still see more to play for post the recent good performance of the shares and would use volatility ahead of the upcoming generic Advair catalyst to look for attractive entry points.”
Peel lifted its target price to 2,630p (from 2,340p).
At 3:03pm: (LON:HIK) Hikma Pharmaceuticals PLC share price was -34p at 2156p
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