Hikma Pharma: Recent setback a buy opportunity?

In these choppy markets, investors are in no doubt in need of haven assets.

Gold is one, sovereign bonds are another. So great is the demand for the latter that Greece, the instigator of the PIIGS crisis a few years back, issued negative yielding bonds this week!

But if you wish to hold equity during turbulent periods, which sectors would you go for? Utilities is one candidate. But UK utility stocks are suffering due to the prospect of a Corbyn government.

Healthcare is another choice. In fact, investors have been buyers of major pharma stocks this year. AstraZeneca (AZN), GlaxoSmithKline (GSK) and Hikma Pharmaceuticals (HIK) are some FTSE 100 examples.

Hikma, in particular, looks interesting because it has large operations across many middle eastern countries. The stock combines high emerging-market sales growth rates and the defensiveness of a traditional healthcare company. The UK-listed company also has significant sales from the US. The firm produces significant generic drugs.

In 2019, Hikma’s first-half sales reached $1 billion dollars, with core operating margin of about 23.6% (slide).

Thus, it is no surprising that Hikma’s shares have rallied significantly over the past year. From its 850p lows in January, prices are now trading above 2,000p. The recent upside breakout suggests another potential rally into its former resistance zone (see below).

A break below 1,800p is needed to suggest an end to its rebound.

Good Money Guide Featured Providers

Trading Forex SIPPs & ISAs Investing Currency Transfers
Visit IG XTB Visit XTB Visit Nutmeg Visit HL Compare Quotes
Looking for an institutional broker? Compare prime brokers here

Be the first to comment

Leave a Reply