Hikma Pharmaceuticals PLC (LON:HIK) was the biggest mid-cap casualty today after US broker Jefferies International downgraded its rating for the generics drugmaker as it thinks the market is likely to be disappointed by the group’s full year outlook.
Jefferies has cut its rating for the FTSE 250-listed firm to ‘underperform’ from ‘hold and chopped its target price to 895p from 1,074p after lowering its earnings per share forecasts.
In late morning trade, Hikma shares were down 6.5%, or 69.5p at 1,005.5p.
In a note to clients, the US broker’s analysts said: “We take a directional view into FY as believe the street is likely to be disappointed by HIK's FY outlook and we anticipate some Roxane write-downs to impact sentiment.”
They cut their 2018 EPS estimates by around a further 7% after analysing the group’s most recent interim management statement and also assume a more cautious sum-of-the-parts stance.
The analysts noted that Hikma has previously placed the emphasis on cash-flow rather than growth for its branded business as hospitals have been slowing purchases and volatile foreign exchange movements has impacted reported growth.
They believe the market continues to be too bullish for this segment.