Will Hikma Pharmaceuticals Plc’s Stock Price Rise Faster Than GlaxoSmithKline plc, AstraZeneca plc, Shire PLC And Johnson & Johnson After Results?

Does Hikma Pharmaceuticals Plc’s (LON:HIK) (LSE:HIK.L) stock price have greater investment appeal than GlaxoSmithKline plc (LON:GSK) (LSE:GSK.L), AstraZeneca plc (LON:AZN) (LSE:AZN.L), Shire PLC (LON:SHP) (LSE:SHP.L) and Johnson & Johnson (NYSE:JNJ)

Hikma Pharmaceuticals Plc
Hikma Pharmaceuticals Plc

The stock price of Hikma Pharmaceuticals Plc (LON:HIK) (LSE:HIK.L) has risen 6% today after the release of 2016 results to the stock market.

This puts Hikma’s stock price performance of the last year ahead of other healthcare stocks such as GlaxoSmithKline plc (LON:GSK) (LSE:GSK.L), AstraZeneca plc (LON:AZN) (LSE:AZN.L), Shire PLC (LON:SHP) (LSE:SHP.L) and Johnson & Johnson (NYSE:JNJ). AstraZeneca’s stock price is 21% higher, Shire has gained 29%, GlaxoSmithKline is 19% higher and Johnson & Johnson’s stock price is 18% up on a year ago.

Hikma’s shares have risen in my view due to the positive results released today. Its revenue increased 35% at reported forex and by 39% at constant forex to $1950 million. Group core operating profit was $419 million, which was 2% higher as reported and 14% up in constant forex. This reflects strong growth in Hikma’s Injected and Branded profitability, which was partially offset by a lower contribution from Generics as well as an increase in R&D investment.

Hikma’s group operating profit was 21% down on a reported basis and 9% lower in constant forex. This reflected a significant increase in intangible amortisation and exceptional items in 2016. Core basis earnings per share was down 18% as reported and 5% down in constant forex at $1.185 following the issuance of 40 million additional shares in February 2016 in relation to the West-Ward Columbus acquisition.

This acquisition helps to position Hikma for future growth in my opinion. It is the company’s largest acquisition to date and alongside investment in R&D, shows the business has long term growth potential in my view. The company’s Generics business is expected to achieve significant growth in revenue and profitability in future years. A focus on higher value products and cost control mean Hikma is relatively confident regarding its future prospects.

In my opinion, Hikma has investment appeal. I’m optimistic about the outlook for GlaxoSmithKline and Johnson & Johnson due in part to their diversified businesses and consumer goods arms. I also think Shire and AstraZeneca have the right strategies to grow their earnings per share through their pipeline strength. However, I feel Hikma is also making good progress and its stock price could perform well on a relative basis.

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