Broker snap: Hikma slide is buying opportunity

1st Oct 2010 12:55

Some investors may be bailing on pharmaceuticals firm Hikma in the wake of the press speculation about a plan by US regulators to ban unapproved oral colchicine products to treat gout, but Panmure Gordon is sticking by the stock."We note the company's announcement this morning regarding the seemingly imminent withdrawal of the company's colchicine product from the US market. The company reiterated its guidance, and we see no reason to alter our forecasts or thesis which remain intact, preferring instead to use any weakness as a buying opportunity for a stock that is a main player of one of the most lucrative pharmaceutical markets globally," Panmure Gordon analyst Savvas Neophytou said. "We continue to find the markets in which Hikma operates very attractive," Neophytou went on to say. "The Middle East and North Africa (MENA) pharmaceutical market is currently worth some US$28bn, and is forecast to experience robust growth in the coming decade. Healthcare in MENA is focusing both on widening access to drugs as well as making a move to combat chronic disorders, which are becoming more prevalent with changing population demographics. Using the average of implied valuations derived from peer group trading comparable multiples, we arrive at our price target of 825p and reiterate our Buy recommendation," the broker concluded.