Berenberg slightly raises target price on Hikma Pharmaceuticals

Berenberg said Hikma had "a solid finish to 2023" across all three of its divisions, with guidance roughly 300bp ahead of consensus group revenue estimates, mainly due to its generics division, and in line with estimates for operating income.

The German bank, which reiterated its 'hold' rating on the stock, pointed out that management noted "a very strong December" for its injectables business, and that US generics pricing had remained stable versus 2023.

Berenberg also highlighted that in the Middle East and North Africa, Hikma was growing ahead of the market, and was now the second-largest branded pharmaceutical company by revenue, after Sanofi.

"We adjusted our estimates to reflect slightly better generics earnings and our price target moves up to £20. Hikma's shares are up 14% year to date and trading on c8.5x 2024 EV/EBITDA (a slight premium to peers), with an improved outlook and guidance looking to be priced in for now," said Berenberg.

Reporting by Iain Gilbert at Sharecast.com