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FTSE edges higher ahead of UK budget and US Fed, but Hikma falls

Discussion in 'Market News' started by Lily, Mar 17, 2016.

  1. Lily

    Lily Forum Member

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    Pharmaceutical group loses 6% after revenue forecast disappoints

    Ahead of a number of key events - including the UK budget and the US Federal Reserve interest rate decision - markets are edging higher once more.

    An exception is Hikma Pharmaceuticals, down 97p or nearly 6% to £16.24 after the group reported in-line 2015 results but forecast lower than expected revenues for the current year.

    Hikma has announced a strong end to 2015. Whilst sales of $1.44bn... were in line with expectations, adjusted earnings per share of $1.44 (Stifel estimate $1.27), were well ahead of consensus. Guidance for 2016 is for sales of $2.0-$2.1bn, slightly below our forecasts, and margin guidance in the generics business, which now includes Roxane, of low double-digits is significantly below our estimates. We continue to believe the long-term benefits of the Roxane acquisition will drive strong earnings growth beyond 2016 and we reiterate our buy rating.

    Hikma’s 2015 was ahead of the market but 2016 guidance is light versus Jefferies estimates and consensus,in particular for US generics but also injectables.

    There should be few headline surprises from Chancellor George Osborne whose hands are largely tied by the uncertainty over whether the UK will still be part of the European Union by the end of June. So, it’s unlikely he’ll announce anything that is likely to lose votes or place the UK in dire straits should the country vote to leave the union. Focus again will fall on the need to cut public spending. Most of the main policies are already known, but some expect him to punish drivers by raising fuel duty, and there could be tax breaks for middle to higher income earners.

    There should be few surprises in the US too with many expecting the Fed to hold off until June at least before raising interest rates again. Investors instead will study comments on growth and inflation for clues as to when the next rate rise may occur.

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