Shire Pharmaceuticals (SHP) produced results that contained both an upgrade to forecasts and, at the same time, the effects of a reorganisation of the business under its new chief executive. The net result of that effort is that growth in product sales of 7 per cent in the second quarter helped push forecasts for earnings growth this year back into double digits, compared with the high single-digit growth the market had previously pencilled in.
While the overall picture looks relatively positive at the moment, it was obvious that management decided to get the pain of restructuring out of the way early in order to get the business up to scratch. For example, reported profits were hit by $199m (£129m) of impairment charges relating to Shire's chronically unsuccessful regenerative medicine business. In addition, a further $43.9m of one-off costs were booked to pay for a well-flagged reorganisation of its business divisions.
Meanwhile, the 14 per cent increase in sales of attention deficit disorder drug Vyvanse to $598m suggests that Shire has managed to successfully switch enough patients away from the patent expiry threatened Adderall XR to defend its market share. Chief executive Flemming Ørnskov said Shire now had nine products in Phase III development, with Lifitegrast for dry-eye disease the closest to regulatory filing.
Broker Morgan Stanley said the new guidance implies earnings growth this year of between 12 and 14 per cent, giving EPS of 223¢ for 2013, up from 203¢ in 2012.
SHIRE PHARMACEUTICALS (SHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,288p | MARKET VALUE: | £12.7bn | |
| TOUCH: | 2,284-2,288p | 12-MONTH HIGH: | 2,318p | LOW: 1,682p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 692¢* | NET CASH: | $202m | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 2.38 | 579 | 85.8 | 2.73 |
| 2013 | 2.43 | 452 | 58.6 | 3.00 |
| % change | +2 | -22 | -32 | +10 |
Ex-div: 4 Sep Payment: 3 Oct *Includes intangible assets of $3.61bn, or 652¢ a share £1=$1.53 | ||||
