Dechra Pharmaceuticals a strong stock, says Investec

Dechra Pharmaceuticals remains a strong stock with plenty in the pipeline, according to Investec on Thursday.

In a trading update for the first half, the company reported revenue growth of 15% at a constant exchange rate (CER), including the integration of Genera which was bought in October 2015. At the actual exchange rate (AER) revenue increased 10%.

EU Pharmaceuticals, excluding Genera, saw revenues rise 4% at CER but exchange rate headwinds saw revenues decline 3% at AER. Growth was driven by Companion Animal Products (CAP) which increased 4% at CER.

Total reported North American revenue increased by 51% at CER on the same period last year.

“Dechra’s trading update for the first half 2016 results (to end-December) demonstrates a company on track to meet full-year estimates with strong growth in North American pharma and EU CAP,” said Investec analyst Cora McCallum.

“The integration of Genera (acquired in October 2015) is proceeding well, and contributed four percentage points to total underlying growth. Pipeline progress is strong with FDA approval for Zycortal in December and two Food producing Animal Products antibiotics gaining EU approval in the last quarter.”

Investec reiterated a ‘buy’ rating and issued a target price of 1141p.

Shares dropped 2.26% to 1,031.13p at 1102 GMT.