Hikma Pharmaceuticals maintained as 'Hold' by Numis with 2660p price target

In the six months to end-June, Hikma's core revenue rose to $882m, from $709m, but operating profit slipped to $176m, from $204m. Interim dividend was 11c a share, in line.

The drug maker continued to expect revenue in 2016 to be $2bn-$2.1bn in constant currency.

"With revenue expectations for the year unchanged the announcement details several areas where Hikma has made strategic investments for the long term that have repressed near term margins," said Numis in a research note.

"A significant increase in expensed R&D on the differentiated generic pipeline and increased costs of the US Branded sales force has increased underlying costs in the generics business."

"With product approvals in generics delayed (1 product launched, 9 approved), Hikma took on lower margin contract manufacturing that further impacted generic margins."

Numis added that with much work to do in genetics in the second half and into 2017, and recommended Hikma as a 'Hold' with the shares trading on 27-times in full-year 2016.

The brokerage's forecasts for Hikma's ful-year core EBITA and core EPS were unchanged at $382m and 111c respectively, these being in keeping with consensus.

"This clearly leaves much to do in H2 with ongoing glycopyrolate sales potentially driving an upgrade to guidance that is already anticipated in our forecasts. The outlook for FY17 is less clear."

In a first-half trading update on 4 August, the drug maker said it expected full year core operating profit of its generics arm to be between $30m and $40m, compared to $46m in 2015.