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2 Nov 2015
Shares in Hikma Pharmaceuticals (HIK) are footing the UK 100 this morning after the pharma company delivered an unpalatable profits warning within its scheduled trading update. Management cautioned against trading below expectations and has cut Generics guidance by at least 14% as sales growth for its gout treatment disappoint and see it pencil in lower margins for the business. While other segments are described as ‘solid’ thanks to demand for legacy products, investors are penalising the use of a hybrid sales strategy (branded + generic) for colchicine which is resulting in slower update of the higher margin generic. While strength elsewhere is seen compensating to some extent it will not offset totally and adds to existing headwinds from FX and geopolitics. The shares may be almost 20% from recent highs, but remain in a very strong long-term uptrend, buoyed by plenty of helpful M&A activity in the health sector.
Mike van Dulken, Head of Research
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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