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Did anyone catch this today? Amazon are looking to enter prescription and generics market, more than likely as a wholesaler that delivers to your door in the US. Implications for hikma?

Before the first world war started to fill them with the desperately incapacitated, a basket case was simply a container that offered protection. As investors again despair at the latest news from Hikma, the Jordanian-based but London-listed drugmaker arguing with a US regulator, it is time to consider the value of the stock as a safe haven. Thursday�s bad news, which prompted the shares to drop 9 per cent, was a trading statement that mentioned a dispute with the Food and Drug Administration. Hikma hopes to bring to market a generic alternative to GlaxoSmithKline�s Advair, a lung cancer drug. Any eventual approval of the medicine, to be made with partner Vectura, moves further into the future. The bigger problem, however, is with generic drugs. Hikma shares have halved this year, taking them back to a place last seen in 2013, when investors were starting to get excited about price rises for generics to be foisted on American consumers. The industry now struggles, with more heavily indebted Teva and Mylan cutting prices as they focus on generating cash flow. Estimates for Hikma�s net profits next year are half what they once were. As a multiple of those profits, the stock�s valuation was lower only in 2008. Yet generics accounts only for about a third of Hikma sales. Look a little closer into the basket and there are two good businesses to be found inside, injectables and branded medicines. Decades of investment have created an injectables unit delivering reliable profits. The branded drug business offers growth and potential to do deals. Together the two divisions should produce about $450m of earnings next year, before interest, tax, depreciation and amortisation, on Numis estimates. Average valuations for the sector, basket cases included, come to about 12 times ebitda. Assume Hikma Generics is worthless. A 10 times multiple for the rest throws up a share price of about �11, well above the �9.50 seen in Thursday�s trading. Bravery is required, but in this case there is some margin of safety.

As for takeover, theres a reason why it hasn't happened, although imperial is cheap, it has too many brands in its portfolio especially in emerging markets and outside Europe. I would imagine JTI dont want to takeover imperial when it has 180 brands, it will wait for imperials stratagy to play out.. which is.. migrating customers off of crap brands onto so called growth brands. Ie take russian local brand.. slowly change the logo to JPS and in the end the customer migrates to JPS and is on the hook! IMB has a +90% migration success rate at this. Once IMB gets rid of non core brands and has customers on the premium smokes, it will have the same number of customers, just fewer brands & fewer costs.. Then my friends.. We will have takeover time. Est 3 years to pull off migrations, 4 for a takeover.

I topped up today, IMB now a disproportionately big holding in my isa, im not worried however.. how long do you really think this will trade at P/E 11. We have brexit, the tories falling apart, all the other tobacco companies trade from 15-22 ratio. This is the buy of 2017. This reminds me of britvic after the sugar tax, similar graph similar situation. Now we have heated tobacco in the pipeline we should see the premiums between tobacco companies start to converge.

Fingers crossed for these results, In terms of share pricing we have come down from a growth stock valuation of mid 20's P/e to a Value stock of around 13 P/e. I guess this is justified seeing as growth is very hard to see over the next 2 years. Hikma was overvalued at 1900+ and i hate to say it as my average is a stinking 1770. I hope these results provide clarity of the scope for growth over the next few years, some advair talk would be nice but not essential to turn this around. A skeleton would be disastrous, I could see us losing 20% if something really bad were to happen, (this is what is in the back of my mind). However thinking rationally what would manifest itself as a potential skeleton? I expect numbers to be in the guided 2bn$ - rather sticky demand with h.c. Darwazah's still holding, FDA date for advair is months away, egyptian pound is still underperforming.. how bad can things be?

Did anyone read the Stifel report? They downgraded Hikma from 2300 to 1300 back in august 29 citing generic pressure. If anyone can explain whether this pricing pressure is likely to be cyclical and why? Hikma interim report see the pressure relieving around 2019. Mylan recently got a 19% boost from approval of a big generic so it cant be all doom and gloom. Speaking on Mylan I hear they are in the best financial position with low debt, they may want to come calling for increased MENA exposure.

Hi V, Thanks for your comments. I hold a small position in distil only because I think the actual combined value of the brands is worth more than the market cap. The only problem is finding a willing suitor to part with cash. And let's be honest that is not diageo. I think the P/E ratio here is a difficult valuation metric to use as it doesn't incorporate the intangible value of red leg and black woods. And it is this intangible value that will make us potentially rich if realised. As for haggis Blocking someone with opinions you don't like is a show of your terrible confirmation bias. The whole point of a maket is opinions get expressed in long and short, so not listening is a silly thing to do. Even if I 'personally abused' they guy

Haggis I really think you are looking at this through rose tinted glasses or should I say through the bottom of your red leg bottle.. You are making assumptions of the populations rum taste on a handful of Internet entires most likely written by us holders! I know I have written a few.. Buying red leg is not the ONLY way a multi billion dollar conglomerate can stop losing market share to a similar brand. As I have said before the fact that the brand message is similar to capitan Morgan makes it even more unlikely.

Hi g&o, the reason galliford will be being hit at the moment along with other house builders will be the thought that BoE will start upping interest rates. This generally has a cooling effect on house prices as cost of borrowing increases and thus house builders are worse off with lower prices.. If you believe interest rates will rise then sell house builder and buy insurers or lloyds.

Can someone please tell me why diageo would buy anything from distil.. Redleg sits in the exact same brand space as Captain Morgan - budget/ medium level Caribbean themed rum. The whole point about adding value with buying brands is to use the current distribution channel to push something new through it. If Diageo buy Redleg to push through their channels, most likely much of the new redleg sales would be switch over from captian morgan buyers. Diageo will never buy redleg. Just because Don worked in the management doesn't mean they will through all investing rational out the window and buy a speculative set of brands. There is a reason why drinks conglomerates down own 100s of brands.. From doing abit of research - Beam Suntory and Brown Forman are the only big boys with no rum brand, these are more likely suitors.

Jimbo you are correct a 2 year bond is one way of looking at it! I think the bad part of all of this is the fact that when it does rise it is likely to be fast and over a short period of time, so the fact we have felt ill for months looking at this sp just makes it worse. I would rather not be taken over before gen advair is released.. Gold and oil - I do think easy jet is headed for turbulence, I sold @1350 just In profit from the biggest avg down excercise known to man.. The price wars will hurt, and its earnings are squeezed.

The buybacks will lift eps, and when 160 million £ of shares get bought I'm sure it will help the so a little

aamir718 - i think you have raised a valid question, you have to take some things into account, the darhwaza family which forms most directors of the company still hold a massive stake in hikma. When you say why arent they buying? it could possibly be that they dont have the cash at hand to buy back, or that having lost 50% of their capital they feel buying more shares would be putting too much at risk, or relying too heavily in one asset class. For owners of the business, there are many other metrics to examine the performance of the business than the share price, and with such volatility, they may be inclined to turn away from the noise.

I have an average of 1700 been buying down at 1300 but dont want to add more until Fda news, i may miss out on say a 10% jump but its far better than buying now with no floor. However I wouldnt fret too much over this share, its never nice to see so much in the red but we have to think - no fraud, no losses, not too indebted and it has lost like 50%. The markets are designed to test our patience! I do think that when gen adv is released this should start moving again, but patience is needed here

http://investors.spirehealthcare.com/media-and-news/news/?id=924889 This can show without the exceptional cost of the criminal payout fund profit only fell 9%. Increasing revenues, new hospitals good growth ahead. The icing on the cake is mediclinics 30% holding. I guess now that mediclinic has received a boost in UAE with deregulation there may be more flexibility to up stakes in spire, probably not going to be a better time to do so. This will likely keep a floor on this. gl

I think today's rise is more likely to be short positions closing taking profit, getting ready for the next step down. This has gone from a high flying growth share to a worrying prospect for money managers to keep stable pension pots in. But I guess that's where us PIs can benefit scooping this up on a 3 year low. Generics are ripe for consolidation, and the fact that hikma thinks they can increase some drugs by 430% shows they have some price control. Short term will see earnings crimped slightly by too much comp.. But we're playing into good trends here..increasing population, increased healthcare spending, as time goes on more drugs go off patent = hikma boost. Do not sell for peanuts here, sit tight, scoop them up. Darwahza has 30% they feel the pain unless they start selling neither should we

I think the talk of going private is questionable. I remember reading darwaza was looking to step down his ceo role In the near future, not something he would be saying if he wanted to pile back in. Also the cost to buy back all the shares I dont know whether the darwazas have that kind of capital.. hikma is much bigger now than when they owned all. They would have to get some private equity backers and that wouldn't be that different from their current situation. It would probably be useful to look at the balance sheets of competitors to see if any can be ready for a takeover, mylan Teva etc, but from when I last looked they are both severely indebted. Someone mentioned Pfizer but not so sure pharmas are looking for generics buyouts..

Held these since 1700, been averaging down, starting to get the jitters here.. only because the P/E has been so high, morgan stanley suggests 2017 results will show an earnings fall? in my eyes suggesting the sp can viably come down much further. You have to ask the question whether the long term growth is over.. i guess not.. my idea is that we are at the bottom of an earnings cycle due to the roxane acquisition. As far as results on the 17th, the market doesn't know better than us. Hikma is a family company, they're going to keep a tight lid on results. As shown by the fda result a few months ago, when they went silent on the day of release, the sp didnt majorly fall until the official release. Bad news is baked in here, any good will create a nice reversal. Strap up for a bumpy ride, gl all.

Please can somebody tell me why this trades at a valuation of 5.5 times 2016 earnings? Why is it being held back so much? thanks

If you look, generic advair was filed on 8th april 2016 sp @ 2087 2 months later in June sp @ 2600. Thats just on filing not approval! Implies more than 30% upside after may 10th if we get the approval we are looking for!