Will Hikma Pharmaceuticals Plc’s share price recovery continue after today’s update?

Does Hikma Pharmaceuticals Plc (LON:HIK) (HIK.L) have further upside potential?

Hikma Pharmaceuticals
Hikma Pharmaceuticals

The Hikma Pharmaceuticals Plc (LON:HIK) (HIK.L) share price is relatively flat today after it released an investor update to coincide with its AGM.

The company has made an encouraging start to the financial year according to the update. In the first four months its Injectables, Generics and Branded businesses are benefitting from recent product launches as well as its broad product portfolio.

The company has continued to make improvements to its cost base. It is on track to meet its efficiency targets, while also investing in its pipeline.

Hikma seems to have a relatively sound balance sheet in my view, with its cash position providing the foundation to invest for future growth.

In its Injectables business, it has performed relatively well in the US after six product launches in the year to date. Increasing demand is helping to offset higher competition, while Europe and MENA have benefitted from good demand and new product launches respectively.

In Generics, Hikma has continued to experience difficult trading conditions in the US, but has benefitted from a favourable product mix. It continues to focus on cost discipline, while seeking to improve its efficiency.

The company’s Branded business has continued to experience relatively high demand across its top markets. Recent product launches have also helped to drive sales growth.

In my view, Hikma has a bright long-term future. Its shares have risen by 16% in the last month after a challenging period, with its financial performance coming under a degree of pressure.

In the current year it is expected to report a fall in EPS of 14%, but this is due to be offset to some degree by a rise of 11% next year. Therefore, while a potentially volatile stock, I believe it has a solid strategy and the financial firepower to continue to invest for future growth.

About Robert Stephens 3395 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 info@investomania.co.uk or use one of the other contact methods available on the 'Contact Us' page