JP Morgan slashes target price on Hikma Pharmaceuticals

JP Morgan slashed its target price on stock of Hikma Pharmaceuticals saying US regulatory approval of its generic Advair application might be postponed, which in turn made the investment bank less confident on the firm's entire drug pipeline.

On 11 May the Food and Drug Administration issued Hikma a major complete response letter in relation to its Abbreviated New Drug Application for VR315, its generic version of rival GlaxoSmithKline's Advair Diskus.

That, analyst James D. Gordon said, implied a delay on the drug's launch until early 2019 - with a 50.0% probability of success.

He also trimmed his estimates for the remainder of Hikma's Roxane pipeline.

All of the above drove sharp cuts to his earnings per share estimates for the years between 2017 and 2020 of 18%, 35%, 14% and 8%.

Summing it up, the target price on the stock was brought down from 2,400p to 1,800p.

Furthermore, with no upside now left in the shares at their new target price, Gordon reiterated his 'neutral' recommendation.

In a separate note issued on the same day, JP Morgan upped its target on GSK from 1,670p to 1,750p.

"With generic Advair significantly delayed, and little visibility on Hikma’s further pipeline assets, our confidence in delivery of Roxane topline growth and margin expansion expectations is reduced."