Jefferies downgrades Hikma on limited upside

Jefferies has lowered its recommendation for Hikma Pharmaceuticals from 'buy' to 'hold' and slashed its target price from 1,500p to 1,250p, saying that upside for the stock is now limited after its recent strong run."We continue to view Hikma as a quality business but re-evaluate the stock after a bumper 2013 and share price spike," the broker said.Jefferies explained that Hikma's antibiotic product doxycycline is showing some signs of price and volume erosion, "and we believe all-time high valuations do not justify a normalised growth profile". "We remain positive on Branded after recently meeting management in Egypt and also US Injectables, but we see limited room for upside from here."Jefferies said that even in its upside scenario it only sees "negligible upside" to its target price. To justify enough upside for a 'buy' rating, forecasts would have to assume above-guidance performances in Branded and Injectables as well as doxycycline maintains its current growth rates for the whole of 2014 and stronger margins."Some short-term investors may want to lock in profits, but given our 12-month view, we encourage investors to wait on the sidelines for a better entry point."The stock was down 2.75% at 1,625p by 13:28 on Friday after having risen by nearly 40% so far this year.BC