Jefferies downgrades Hikma to ‘hold’

The bank said that following Hikma’s nine-month trading statement, it sees limited near-term catalysts, a tough 1H'24 base comp, protracted compounding ramp up, and an earnings per share decline in 2024, with lower expected contribution from gXyrem.

Jefferies said that although US generics and branded guidance were upgraded, it expects a lowering of the injectables outlook to weigh on the shares as this is both the greater value and sentiment driver.

"Although capacity is being ramped up to address short-term constraints, this was a surprise to us and we also now expect ramp up costs in 1H ’24," it said.

The bank noted that as a momentum stock, Hikma tends to perform well during periods of earnings per share upgrades.

"We now see risks skewed to the downside until greater visibility on EPS emerges," it said.