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On Wednesday, BNP Paribas (OTC:BNPQY) Exane initiated coverage on Hikma Pharmaceuticals (OTC:HKMPY) Plc, a global generics pharmaceutical company with a significant presence in the United States and the Middle East and North Africa (MENA) region. The firm assigned an Outperform rating to Hikma stock and set a price target of £26.50.
In their analysis, BNP Paribas Exane highlighted Hikma’s diversified and vertically integrated business model, which positions the company well in the face of global protectionism. The firm pointed out that Hikma’s strong manufacturing presence in the US, where it locally produces 75% of its US business, which accounts for 60% of its forecasted FY24 revenues, could be a strategic advantage. They noted that Hikma’s affordable generics business is entirely US-based, which they believe makes the company a relative winner within their coverage universe.
The analyst at BNP Paribas Exane, Victor Floch, commented on the potential impact of US tariffs on the pharmaceutical industry, suggesting that Hikma could benefit. According to Floch, the company’s end-to-end domestic capabilities in its core markets could shield it from the rise of global protectionism. He also suggested that Hikma could leverage the situation to gain market share and monetize its manufacturing capacity by partnering with firms looking to reshore production.
BNP Paribas Exane’s coverage initiation comes as Hikma prepares for a Capital Markets Day (CMD), which is expected to provide further details on the company’s long-term outlook. The firm anticipates that the CMD will reveal a positively skewed outlook for Hikma.
The coverage initiation by BNP Paribas Exane is based on the premise that Hikma is well-positioned to navigate the current market environment, especially with the potential imposition of US tariffs on pharmaceuticals. The Outperform rating suggests that the firm expects Hikma’s stock performance to be strong relative to the market or its peers.
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