JP Morgan raises target price on Dechra Pharmaceuticals

Analysts at JP Morgan Cazenove raised their target price on veterinary pharmaceuticals group Dechra from 3,200.0p to 3,600.0p on Thursday, stating they expect a year of "strong topline growth" to take place in 2021.

Despite lingering pressures from Covid-19, JP Morgan still sees Dechra delivering 11% revenue growth in the coming year, or 5% on an organic basis, and after also reflecting increased research and development investment and dilution from the company's June equity raise, the analysts still see roughly 5% core earnings per share growth.

Looking beyond 2021, JPM expects organic earnings per share growth to accelerate to "a double-digit" compound annual growth rate for 2022-24, with continued strong topline and margin expansion.

"Our forecasts could also prove conservative for 2021 and beyond, given the recent Covid-19 prompted spike in dog ownership, which could translate into a demand boost for Dechra products," added JPM.

On top of this, the analysts noted that it also sees further potential upside from Dechra putting its now under-geared balance sheet to use.

"With a strong and sustainable organic growth outlook, M&A upside, and diversification from US healthcare reform headwinds, we remain 'overweight'," said JPM.