Berenberg hikes target price on Hikma Pharmaceuticals

(Sharecast News) - Analysts at Berenberg raised their price target for Hikma Pharmaceuticals from 1,800p to 2,100p on Tuesday, saying the business was "moving in the right direction" following a strongerthanexpected first half.

Berenberg said Hikma's share price has largely recovered since February's FY25 results, when the group withdrew its mediumterm guidance. Management has since reassured the market on strategy and fundamentals, and the H1 update showed a clear stepup in core operating profit, ahead of consensus. That performance, it said, has "significantly derisked" delivery of Hikma's reiterated FY26 guidance.

While it expects a secondhalf increase in R&D and sales and marketing spend, the broker forecasts FY26 core operating profits to come in at around the midpoint of guidance and views 2026 as a transition year before a reacceleration in 2027.

Hikma's generics arm was said to still be on track, with highermargin CMO revenues helping offset increased competition in sodium oxybate, a trend Berenberg expects to continue into 2027 as CMO volumes ramp up under a major pharma contract.

In injectables, the shift from Vanco Ready to Tyzavan weighed on H1 revenue, but Berenberg expects this headwind to fade as Tyzavan sales build and CMO contributions increase, while its branded wing delivered "exceptional" H1 results, with 14% constantcurrency revenue growth and a 32.5% core margin.

Berenberg, which kept its 'buy' rating on the stock, added that revised mediumterm targets would help improve visibility and support a further rerating, with any future revenue goals likely backed by both organic growth and M&A. The German bank added tbat a focus on absolute profit growth, rather than margins alone, would be a sensible approach going forward.

Reporting by Iain Gilbert at Sharecast.com