Hikma Pharmaceuticals

Wednesday, 15th March 2017 10:32 - by Rajan Dhall

Since the run up to the US elections Pharma stocks have been subdued, Hilary Clinton was initially against the sector in general. Targeting Mylan for the cost of products like Epipen and now President Trump has launched tirade against the Pharma industry prices. Shares in the major Pharma companies have been affected with general sector decline. The XPH SPDR ETF fell from a high of 47 to a low of 36 since the elections but have now consolidated slightly. This is significant as the general trend since conception had been bullish and Trump has been the one and only reason that that trend halted. 

This company has performed inline with the retracement and bigger names GSK and Shire have performed slightly better but this could give Hikma an advantage as some may see it as slightly undervalued. In terms of sales, Hikma's product revenues are expected to rise, and the Co.'s West-Ward Columbus subsidiary recently brought out an alternative to the Pristiq depression battler named Desvenlafaxine Succinate which looks to be performing well. The company stated that industry sales of the product registered at USD 853m in 2016

In terms of broker recommendations JPM and Numis have both projected high price targets for Co. shares with an average of around 2400. On one of the major financial terminals 8 analysts have a rating of “strong buy”, 0 analysts “buy”, 1 analysts “neutral”, 0 analysts “sell” and 0 analysts “strong sell”, so sentiment is pretty bullish. 

For once I am of the same opinion, the trend is strong and price rejected the lower levels of 2060 and have held above the 2100 area. In terms of resistance for a move higher, there is a downward trendline on the daily chart to contend with but if results come in strong we may see a test of the 2200 area within the coming weeks. At the moment price is stuck between the 2200 and the 2060 are within a consolidation period and at the 2150 price level we have seen a few contracts changing hands so traders must see this area as 'good value'.Regardless of the results the fundamentals and technicals of the company seem good and a poor report tomorrow could present an opportunity for a longer term trade.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.