Stifel slashes Hikma target price but stays positive

(Sharecast News) - Stifel has slashed its target price for Hikma Pharmaceuticals by nearly a third but said it still sees significant upside, saying the recent sell-off represents a "good entry point" for new investors. The broker has cut its target price for the shares from 2,400p to 1,700p, though that still implies 40% potential upside from current levels after a 25% slump in the stock since FY25 results were released on 26 February.

Stifel said that the market has "lost confidence" which will take time to restore, with the jewel of the group - margin levels in the injectables division - disappointing as of late.

"Having thought the plaster had been ripped off in November 2025 when downgrading the Injectables operating margin from mid-30s to a new 'floor' of 30%, guidance for FY26 at 27-28% understandably spooked the market," Stifel said.

"Quite a swing, that has left the market searching for a floor and concerned that margin could erode further, making it harder to deliver profit growth which is needed to make the stock work."

Nevertheless, with the stock back down to 2022 levels, when the former Generics business was struggling - before management stabilised the business and rebased expectations - investors could prosper from buying the dip, Stifel said.

"We [...] accept that investors may want to see some positive proof points, but on balance, we believe the current price and near-three-year low valuation will prove to have been a good entry point."

Hikma shares were trading up 1.8% at 1,218p by 1455 GMT.