Will Shire PLC outperform Hikma Pharmaceuticals Plc and Smith & Nephew plc after asset disposal?

Does Shire PLC (LON:SHP) (SHP.L) have more investment appeal than Hikma Pharmaceuticals Plc (LON:HIK) (HIK.L) and Smith & Nephew plc (LON:SN) (SN.L)?

Shire PLC
Shire PLC

The Shire PLC (LON:SHP) (SHP.L) share price has risen by around 2% today after the company announced the sale of its Oncology business. It has been sold to Servier for $2.4 billion in cash, with it set to unlock embedded value within the company’s portfolio.

The business unit has been deemed non-core in terms of Shire’s long-term growth strategy. It will allow the company to refocus on its core areas, notably in reinforcing its leadership in rare diseases.

The company is continuing to evaluate its portfolio as it seeks to improve its efficiency. It is seeking to sharpen its focus on rare diseases, with the potential for selective disposals of non-strategic assets over the medium term.

The proceeds from the sale may be returned to shareholders through a share buyback. However, this has not yet been confirmed, with the company likely to await further details on Takeda’s potential offer for the business in my view.

Clearly, this is a time of significant change for Shire. It is the subject of a potential bid approach, while it is seeking to streamline its portfolio through selective asset disposals.

Its share price has risen by 14% in the last month. This is ahead of other healthcare industry peers such as Hikma Pharmaceuticals Plc (LON:HIK) (HIK.L) and Smith & Nephew plc (LON:SN) (SN.L). Hikma is up 7%, while the Smith & Nephew share price is down 1%.

In my view, Shire has investment appeal for the long run. Whether there is a bid in the near term is clearly a known unknown. However, I believe that the company has a solid strategy which could see it continue to offer growth potential over the long run.

While its share price performance has been disappointing in recent years, I’m upbeat about its future prospects within an industry that I remain bullish about.

About Robert Stephens 3891 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