Thursday tips round-up: Hikma Pharmaceuticals, Foxtons

12th Mar 2015 18:16

Hikma Pharmaceuticals' decision not to sell its injectables business is probably one of the savviest decisions the company has taken in the last few years. The price-tag mooted was $2bn. More importantly, it put the little-known firm on many investors' radars. That unit saw its sales in the US rise by 51% in 2014 and has driven its entrance into that market. It also compensated for the more volatile markets in the Middle East and North Africa.The firm's branded products unit should see some improvement but the sales outlook for injectables is flat. Hikma will not be able to repeat last year's performance at that division while the generics arm will continue to decline until new compounds arrive. Nevertheless, yielding less than 1% this is not a dividend stock and its shares now change hands at 23 times earnings. Hence, further upside looks limited. "Avoid for now" is the advice from The Times's Tempus.The speed of the slowdown in house price rises in the capital surprised markets and investors in Foxtons were no exception. Yesterday the firm reported interim adjusted earnings of £46.2m, well below the £57.2m which analysts had pencilled in. To some degree the lettings business has acted as an offset to property sales, rising by 7.7% over the last three months. The company timed its flotation very well, hitting the market at a peak. Having begun its life as a listed company at a price-to-earnings multiple of approximately 19 times' earnings in February at one point last year they changed hands at 27 times earnings. Now, at 16 times earnings they still look overvalued. Avoid, says The Daily Telegraph's Questor column.