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Shares in Hikma Pharmaceuticals Plc rise 4 percent after UBS upgradesthe company's stock to "buy" from "neutral", as it expects the drugmaker tobenefit from a weaker Japanese yen and to continue to profit from sales ofdoxycycline - an antibiotic to treat malaria.
The brokerage said that, even factoring in a dip in doxycycline sales and a40 percent fall in the drug's price in 2014, it expects Hikma to report earningsbefore interest and tax (EBIT) from sales of the drug in excess of $50 million.
"We believe this assumes a conservative scenario and consequently see upsiderisk to this 2014 EPS (earnings per share)," UBS analysts write.
The company had enjoyed soaring sales of doxycycline due to shortage of thedrug in the United States, allowing it to raise its full-year forecast threetimes in 2013.
This year, Hikma's doxycycline sales could be hit by the entry of anothergeneric drugs player, but UBS analyst Guillaume van Reterghem reckons that anynew entrant would likely have the incentive to keep prices relatively high.
He raises his target price on the stock to 1,350 pence from 1,050 pence,implying an upside of around 100 pence from current levels.
Reuters messaging rm://esha.vaish.thomsonreuters.com@reuters.net
