Hikma shares jump after Citi upgrade to 'buy'

19th Jun 2015 08:56

Pharmaceuticals group Hikma was a high riser on the FTSE 100 on Friday after analysts at Citigroup upgraded the stock from 'neutral' to 'buy', recommending investors "keep the faith" despite a recent drop in the shares.The stock has plunged over 25% since Citi's downgrade to 'neutral' in late February, exceeding consensus profit cuts.The bank said Hikma's current valuation now "provide[s] an attractive entry point in our opinion".Citi said Hikma offers investors the prospect of sustainable long-term double-digit organic revenue growth in the branded generic and injectables markets, with significant operating leverage leading to continuing high margins."Despite our estimates being modestly below consensus, the shares at 22x 2016e [earnings]/19x 2017e [earnings] provide what we see as an attractive entry point in light of a five-year organic earnings compound annual growth rate of 14%," the bank said.Citi maintained a 2,400p target price for Hikma's shares.The stock was up 4.1% at 1,972 by 09:26, having touched a high of 2,002p early on.