James Vane-Tempest has moved his recommendation to ‘underperform’ from ‘buy’, chopped the price target by a third and lopped a quarter from his 2017/18 earnings forecast.
The catalyst for the change is the likely delay to the introduction of a low-cost, copycat version of GlaxoSmithKline’s (LON:GSK) inhaled asthma drug, Advair, being developed by the company.
“Hikma doesn’t rule out approval in 2017 but we view this as unlikely,” said the Jefferies number cruncher.
“We believe the delay could be until the second-half of 2018 at the earliest assuming three months to get an FDA [US Food & Drug Administration] meeting, six months to put together a re-submission package and six months for a class-two review.
“However, if another trial is needed we estimate it could add six to nine months.
“The delay in our view also limits the commercial potential before other entrants potentially enter the market.”
Further details could emerge when the company provides a first quarter trading update on Friday, the analyst said.
Vane-Tempest has chopped back his valuation of the stock to £14.50, which is 16% below the current share price of £17.29 (down 2%).
Of the nine analysts currently following Hikma, six are ‘buyers’ of the stock, while two have ‘sell’ recommendations. There is one ‘neutral’ call.
The consensus valuation is £24.10, which is significantly ahead of the current price.