Jefferies has raised its price target on Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) to 2,025p from 1,870p, pointing to the expanding contract manufacturing business as the source of the upgrade.
The 'buy' rating is unchanged, with the new target implying 24% upside from Tuesday's share price of 1,633p (flat).
Analyst James Vane-Tempest nudged medium-term revenue and earnings estimates up by 1% to 2%, encouraged by the contract manufacturing organisation, or CMO, arm and its longer-term potential.
The broker remains cautious on the strategic decision relating to sodium oxybate, the generic sleep-disorder treatment that has driven recent prescription drug momentum.
Management expects any future headwind from that product to be offset by CMO expansion, with commercial production on a large contract due to begin in 2027.
Hikma is targeting roughly 20% of prescription drug revenue from contract manufacturing by 2030.
The company reiterated full-year group guidance at its interim results while raising branded guidance to the top end of the range.
Jefferies attributes that to tender timing and temporary stockpiling in the Middle East and North Africa following geopolitical disruption.
The broker cautions against reading the first-half performance as a run rate.
Marketing and promotional activity was deferred by travel restrictions and will resume in the second half, meaning both revenue and profitability are weighted towards the first six months.
Management has flagged mid to high single-digit branded revenue growth and operating margins in the mid-20s as the more sustainable trajectory.
The injectables franchise, a persistent drag on the shares, has stabilised.
Around 80% of Vanco Ready customers have fully or partially switched to Tyzavan, and Jefferies expects a return to top-line and profit growth in that division from 2027.
Jefferies forecasts revenue of $3.46 billion this year, broadly in line with consensus, rising to $3.57 billion in 2027, about 1% below the market.
The shares have traded between 1,187p and 1,865p over the past year.
