- Hikma Pharmaceuticals
- 10 December 2024 10:29:14
Source: Sharecast
RBC said after "a robust rebound" for Hikma's Generics division in 2023, growth has been slower in 2024 due to "higher payaways on sodium oxybate".
However, it still expects Hikma to return to mid-high single-digit growth CER, with "notable opportunities" in its Injectables and Branded business segments.
The Canadian bank also noted that Hikma trades at a sector discount on PEG ratio and said, even if the multiple doesn't re-rate, the combination of high single-digit earnings growth and 3% dividend yield should support attractive shareholder returns.
"We value Hikma using an average of three approaches. Our PE sum-of-the-parts sets fair value at £22.71. A PEG ratio analysis (sector of 1.7x) suggests a lower valuation of £21.70, Finally, our DCF model (9% cost of equity and 1.5% terminal growth rate) suggests fair value at £26.76. The average of these approaches, rounded to the nearest 25.0p, sets our price target at £23.75, which implies over 20% upside," said RBC.
Reporting by Iain Gilbert at Sharecast.com