Shire sets out bullish guidance for 2016 after beating quarterly forecasts

Shire beat fourth quarter sales forecasts and issued much stronger guidance for 2016, targeting double digit top-line growth and a 7%-10% increase in earnings before including the effect of its takeover of Baxalta.

Fourth quarter revenues rose 9% to $1.72bn, up 13% at constant exchange rates (CER) and slightly above consensus forecasts of $1.695bn, with quarterly non-GAAP diluted earnings per American Depositary Share (ADS) rising 13% to $2.97, comfortably ahead of the $2.87 expectation.

This meant full year revenues rose 7% to $6.42bn, up 11% at constant exchange rates, as product sales grew 5%, or 10% if excluding Intuniv, which was hit hard by generic competition in late 2014.

Although EBITDA margins excluding royalties & other revenues were down one percentage point to 43%, non-GAAP diluted earnings per ADS rose 10% to $11.68, up 14% at CER and beating guidance for high single digit growth.

Chief executive Flemming Ornskov said he expected to deliver "strong results" in 2016, anticipating generating double-digit top-line growth and a 7%-10% increase in diluted non-GAAP earnings per ADS, while still continuing to invest behind dry eye treatment Lifitegrast, newly acquired Dyax and the rest of the pipeline.

Ornskov's guidance implies 2016 non-GAAP EPS of $12.50-12.85 versus consensus that was around $12.55 per share.

It should be noted that the 2016 outlook includes the effect of the Dyax acquisition but excludes the effect of the announced combination with Baxalta.

In 2015, revenues were driven by strong sales of Vyvanse for attention deficit hyperactivity disorder (ADHD) in adults and children; Cinryze and Firazyr for hereditary angioedema (HAE); Lialda/Mezvant for ulcerative colitis; and the inclusion of short bowel syndrome and hypoparathyroidism treatments Gattex/Revestive and Natpara from the acquired NPS.

The fourth quarter saw Vyvanse sales up 18% on the same period last year, Adderall down 5%, Lialda up 9% and Cinryze up 1%, with total product sales held back roughly 4% by forex headwinds.

Analysts at RBC Capital Markets said the fourth-quarter results and new 2016 guidance "should be viewed favourably by investors" and hoped that a later conference call with Shire's management would reveal more detail about Baxalta, the date of re-submission of Lifitegrast to the FDA, and various pipeline and clinical updates.

Shares in Shire were 2.7% higher at 3,665p by 1430 GMT on Thursday.