Broker tips: Hikma Pharmaceuticals, Vistry Group
Analysts at Jefferies upgraded drugmaker Hikma Pharmaceuticals from 'hold' to 'buy' on Wednesday, stating the group's share price was yet to reflect "a series of upcoming product catalysts".
Beyond Hikma's gVascepa and Gx Advair products, Jefferies said it also sees "significant optionality" from specialty product launches in US generics and new launches in injectables, both of which should sustain strong mid-term growth.
As a momentum stock, Jefferies said looking beyond the 2021 trading year; its 2022 underlying earnings forecasts were 5% above consensus, while 2023 was 11%, and added proprietary analysis of NADAC data with IQVIA data also suggested potential upside from Gx pricing if current trends persist.
Jefferies also noted that Hikma trades at a 10% discount on an enterprise value to earnings before interest, tax, depreciation and amortisation ratio despite marginally stronger growth than its peer group.
"Hikma has typically traded on momentum, and we see the strong outlook on new product launches as supportive of multiple expansion," said Jefferies, which issued Hikma with its new price target of 2,870.0p.
Analysts at Berenberg raised their target on construction firm Vistry Group from 1,210.0p to 1,270.0p on Wednesday, stating there was still more gains to come despite the stock's recent rise.
Berenberg said Vistry had been one of the best-performing stocks in the sector since the third quarter of 2020 – up 92% – and it thinks that this momentum will continue.
"We believe that the successful implementation of the group's growth plans, an improving balance sheet and the shifting sales mix will ultimately result in a re-rating for the shares," said Berenberg.
The German bank also said Vistry management's performance had so far been excellent, noting that if it can continue to execute as well as it has done, the analysts think that there could be upside to numbers alongside the valuation uplift.
"Our forecasts are c2-5% ahead of FY 2021-23 consensus PBT expectations; consequently, we reiterate our 'buy' rating and raise our price target to 1,270p," said Berenberg.