Does Dechra Pharmaceuticals plc have more growth potential than Shire PLC, Smith & Nephew plc and Hikma Pharmaceuticals Plc after today’s update?

Is Dechra Pharmaceuticals plc (LON:DPH) (DPH.L) a better buy than Shire PLC (LON:SHP) (SHP.L), Smith & Nephew plc (LON:SN) (SN.L) and Hikma Pharmaceuticals Plc (LON:HIK) (HIK.L)?

Dechra Pharmaceuticals plc
Dechra Pharmaceuticals plc

Dechra Pharmaceuticals plc (LON:DPH) (DPH.L) has released an update to the stock market today. It has issued a very brief trading update ahead of its AGM, which is taking place today.

The company’s performance in Q1 has been in line with management expectations. It has experienced continued growth across all of its markets. The company will announce its interim results for the six month period to 31 December 2017 on 26 February 2018.

In the last year the Dechra Pharmaceuticals share price has risen 46%. That’s a better performance than sector peers such as Shire PLC (LON:SHP) (SHP.L), Smith & Nephew plc (LON:SN) (SN.L) and Hikma Pharmaceuticals Plc (LON:HIK) (HIK.L). The Shire share price has fallen 27%, Hikma has dropped 39% and Smith & Nephew is up 15% during the same 12-month time period.

In my opinion, Dechra Pharmaceuticals has investment potential for the long run. I’m bullish on the prospects for the healthcare sector and think it could be a good place for me to invest in the long run and the short run.

In the short term, I feel the industry could offer low correlation with the performance of the wider economy. With Brexit causing uncertainty and the geopolitical risks involving North Korea being relatively high, I think stocks which do not depend on the outlook for the economy could perform relatively well.

In the long run, I feel Dechra Pharmaceuticals and a number of its peers including Shire, Smith & Nephew and Hikma could be undervalued given their growth potential. In my opinion, the healthcare sector is relatively undervalued just now, and this could translate into capital growth in the long run.

Therefore, I’m upbeat about the company’s long term investment outlook. I think it could continue to offer outperformance versus the wider index and its own sector.

About Robert Stephens 3883 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page