Shire sees double-digit full-year growth, new CEO - UPDATE

Pharmaceutical giant Shire said Flemming Ornskov will replace Chief Executive Angus Russell when he retires in 2013 as the group continues on course to meet double-digit earnings growth for the year.

Pharmaceutical giant Shire said Flemming Ornskov will replace Chief Executive Angus Russell when he retires in 2013 as the group continues on course to meet double-digit earnings growth for the year.

The London-listed firm, whose attention deficit hyperactivity disorder (ADHD) drugs, Vyvanse and Intuniv, continued to increase their market share during the three months to September 30th 2012, said non-GAAP diluted earnings per ADS (American Depositary Share) rose 6% to $1.36 while revenue increased 1% to $1.1bn.

Chief Executive Officer Angus Russell commented: "Shire's business is progressing well. This quarter we grew Non GAAP earnings per ADS by 6% after increasing our investment in R&D by over 20% to fund our increasingly late stage pipeline. We continue to generate strong cash flows (up 20% to over $350m in the quarter), which will support our future growth."

"The ADHD market is one of the fastest growing major therapeutic categories in the US and our lead product VYVANSE continues to gain share and generated strong prescription growth in the US despite the entry of additional generics in the ADHD market," he added.

Shire's shares have been under pressure on fears the company could cut its financial guidance for this year, given increasing competition to some of its key products from generic competitors.

Of particular concern was generic competition to its Adderall XR attention deficit drug, sales of which were down 32% to £102m.

Nevertheless, the company said that it remains on track for double digit full year earnings growth in 2012 and it is also increasingly confident in meeting its target of delivering sound earnings growth in 2013 as well as increased growth beyond that.

Consensus forecasts for the full year are for pre-tax profits of £880.31m on revenues of £3.03bn.

Broker comment

Jeffries, has a 'Buy' recommendation with a 2,400p price target. Its analysts commented: "Typically the stock has traded at a premium to net present values but now is at a discount to our 2,030p ($100) sum-of-the-parts valuation. We believe heightened confidence in the mid-term organic growth trajectory should trigger a re-rating."

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