Hikma, the Jordanian-based business, became the first pharmaceutical company to join the FTSE 100 since Shire when it became part of the leading index in March.
Since then its shares have drifted lower, partly on the slower than expected launch of its gout treatment once an objection by rival Takeda was overturned.
But they have climbed more than 2% to £20.55 after analysts at Stifel raised their recommendation from hold to buy, partly on the prospects for acquisition moves. Analyst Max Herrmann said:
The Jordanian-based company has expanded rapidly over the past few years by building a world-class injectable generics business and enjoyed strong growth as a branded pharma player in its home MENA markets. Following the recent decline in Hikma’s share price, the company now trades at a 10% 2015 PER discount to its peers. We believe the sell-off is overdone, and we are therefore upgrading our recommendation to Buy.
Any reticence to consider Hikma seems to primarily be concerned with Hikma’s roots as a Jordanian, family-run company with a large operation in the Middle East. However, with the family controlling 28.8% of the company through their Darhold Ltd stake, management interests are well aligned with the shareholders.
We believe large acquisitions are possible in the near future and will remain an integral part of Hikma’s business plan....Chief executive Darwazah highlighted Turkey as a key acquisition target at the management day, and we believe an acquisition here is likely in the near future. Acquisitions are an integral part of Hikma’s strategy, and one that is likely to continue.
