On Tuesday, RBC Capital Markets adjusted its stance on Hikma Pharmaceuticals (OTC:HKMPY) Plc, upgrading the stock from Sector Perform to Outperform. The investment firm maintained its price target for the company at GBP23.75.
The upgrade comes as Hikma's shares have shown little movement over the past year, even though the company's fundamentals have improved, particularly in its Injectables and Branded divisions. RBC Capital had previously expected a slowdown in growth for 2024, attributing this to the performance of the Generics division. However, the outlook for 2025 has shifted, with projections now indicating a return to strong growth at constant exchange rates (CER).
RBC Capital's five-year forecast for Hikma anticipates a 7% growth in Core Earnings Per Share (EPS), coupled with a 3% dividend yield. The analyst noted that this potential growth does not seem to be currently priced into the stock, which is trading at approximately 11 times forward Price to Earnings (PE).
The unchanged price target of GBP23.75 suggests that RBC Capital sees continued value in Hikma's shares, despite the market's sideways trading pattern. The firm's positive outlook is based on the expected resurgence in growth and the perceived undervaluation of the stock in light of its growth prospects and dividend yield.
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