Leading shares are sliding following a poorly received Spanish bond auction, but pharmaceuticals group Shire is bucking the trend.
The company has seen a number of setbacks in the past few weeks, including a failed clinical study relating to its Lialda treatment and the withdrawal of a regulatory application for its drug for Fabry disease.
But its shares are currently 27p higher at £20.57, the biggest riser in a falling FTSE 100 after Morgan Stanley repeated its overweight rating although the bank cut its target price from £25.80 to £24.30. Analyst Peter Verdult said:
We continue to believe Shire is one of the best positioned companies across pharma, underpinned by its exposure to
the fast growing therapeutic categories of ADHD, orphan drugs and diabetes. Despite recent disappointments, we still forecast a 2012-15 earnings per share compound annual growth rate of 17%, with our 2015 forecast 14% ahead of consensus.
We believe the market continues to under-appreciate the global potential of Shire's ADHD franchise as well as label expansion opportunities for Vyvanse. Efforts to strengthen the pipeline continue and we note Shire's financial strength: net debt below $0.5bn with free cash flow of more than $1.0bn per annum.
Other drug companies are also in demand for their defensive qualities in a falling market, with GlaxoSmithKline up 8.5p at £14.37.
The market sell-off - which was initially caused by poor Australian export figures and hints the US Federal Reserve may not authorise further quantitative easing - has accelerated following the bond auction. Spain raised less than hoped at a higher than expected interest rate. So the FTSE 100 is now down 64.68 points at 5773.66, with French and German markets both down more than 1%.
