Kepler Cheuvreux initiates coverage of Shire with a 'buy'

Analysts at Kepler Cheuvreux announced on Friday they had commenced coverage on rare diseases specialist Shire.

Kepler said Shire's decision to pivot away from being solely focused on attention deficit hyperactivity disorder (ADHD) through a series of acquisitions, including the 2016 incorporation of Baxalta which gave the firm a strong presence in the haematology and immunology sectors showed significant promise.

While noting that the group's immunology department appeared to be underutilised and overlooked, the haemophilia A market was considered to be risk-free, despite competition from Roche which was gearing up to launch its ACE910 product.

Indeed, worries about competition from ACE910 appeared to be what was keeping investors awake at night, despite the shares' attractive valuation.

Yet even under a worst case scenario in which it lost all hematology sales after the ACE910 launch, the company's shares would be worth approximately 4,000p, the analysts estimated, or about 7% above its then current price.

The broker's analysts set a 4,600p target price, further pointing out that the shares looked "cheap" in terms of their forward price-to-earnings multiple when compared with that of their European large-cap peers.

The shares were also at a 23% discount to the sum-of-the-parts net present value which they had estimated.

As of 1620 BST, Shire shares had seen a relatively small 1.64% to 3,755.50p.