Citi has initiated coverage of Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) with a 'buy' rating and a £17 price target, arguing the generic drugmaker's current valuation offers a compelling entry point.

The 12-month target, based on a sum-of-the-parts valuation, implies a share price return of around 14%.

The bank said Hikma is a business in strategic reset with the right priorities, including shifting research and development towards more differentiated assets and investing in US manufacturing.

That investment covers both Hikma's own products and contract manufacturing for third parties.

Citi also pointed to sustained momentum outside the US, particularly in the Middle East and North Africa, where it believes Hikma's competitive moat is wide.

The broker cautioned that the financial inflexion remains execution-dependent, with the Bedford manufacturing plant coming online in 2028 among the most important catalysts.

Citi forecasts compound annual growth of around 4% in revenue, 6% in adjusted operating profit and 8% in adjusted earnings per share between 2026 and 2030.

It also expects around 100 basis points of adjusted operating margin improvement over the period.

The bank highlighted a combination of a roughly 5% dividend yield, a low multiple versus history and a strong balance sheet as supporting the investment case.

Hikma, a FTSE 100 constituent, manufactures generic, injectable and branded medicines across the US, MENA and Europe.

The London-listed group has faced pressure in recent years from pricing dynamics in the US generics market, making the pivot towards differentiated products central to its strategy.