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(Sharecast News) - Analysts at Berenberg raised their price target for Hikma Pharmaceuticals from 1,800p to 2,100p on Tuesday, saying the business was "moving in the right direction" following a stronger‑than‑expected first half.
Berenberg said Hikma's share price has largely recovered since February's FY25 results, when the group withdrew its medium‑term guidance. Management has since reassured the market on strategy and fundamentals, and the H1 update showed a clear step‑up in core operating profit, ahead of consensus. That performance, it said, has "significantly de‑risked" delivery of Hikma's reiterated FY26 guidance.
While it expects a second‑half increase in R&D and sales and marketing spend, the broker forecasts FY26 core operating profits to come in at around the midpoint of guidance and views 2026 as a transition year before a re‑acceleration in 2027.
Hikma's generics arm was said to still be on track, with higher‑margin CMO revenues helping offset increased competition in sodium oxybate, a trend Berenberg expects to continue into 2027 as CMO volumes ramp up under a major pharma contract.
In injectables, the shift from Vanco Ready to Tyzavan weighed on H1 revenue, but Berenberg expects this headwind to fade as Tyzavan sales build and CMO contributions increase, while its branded wing delivered "exceptional" H1 results, with 14% constant‑currency revenue growth and a 32.5% core margin.
Berenberg, which kept its 'buy' rating on the stock, added that revised medium‑term targets would help improve visibility and support a further re‑rating, with any future revenue goals likely backed by both organic growth and M&A. The German bank added tbat a focus on absolute profit growth, rather than margins alone, would be a sensible approach going forward.
RBC Capital Markets initiated coverage of BAE Systems on Tuesday at 'sector perform' with a 2,200p price target, as it highlighted steady growth but slightly below peers.
In its initiation note, RBC said that while benefitting from wider defence tailwinds, it now sees BAE under-growing its European peers given its geographic and product mix.
"Geographically, this is driven by high US/UK exposure (70% of sales) growing at +11% / 8% versus NATO Europe (12% of sales) growing at +16% per annum," said the Canadian bank.
Product-wise, RBC said it sees a highly diversified portfolio, but with notable slower growing fixed-wing platform exposure. "Framed against our positive sector view, we see a price-to-earnings of 26x26E (versus peer average 27x) as fair and initiate at sector perform," it said.
"Framed against our positive sector view, we see a price-to-earnings of 26x26E (versus peer average 27x) as fair and initiate at sector perform," it added.
