- Sublocade sales up over 50 per cent
- Operating loss narrows
Despite its London listing, Indivior (INDV) is essentially an American company. It makes over 80 per cent of its sales in the US and its top-selling products are designed to address an acute public health crisis there: opioid addiction.
It’s therefore unsurprising that the group is seeking to move to a primary listing in New York while maintaining a secondary presence in the UK. In its annual results, the company said the shift would help it to attract more American investors and, in time, allow for its inclusion in major US indices.
Shareholders in London seem amenable to the change, the stock soaring almost 20 per cent on the morning of the results announcement as the prospect of the shares being valued on a par with US peers was factored in. The other factor driving this enthusiasm is the group’s strong sales performance in 2023.
Sales of Sublocade, one of its treatments for opioid use disorder, were up 54 per cent across the year. Meanwhile, a projected decline in revenue from Suboxone film was less extreme than some feared. All told, Indivior managed to deliver an operating loss of $4mn – a significant improvement on the $85mn loss it reported in 2022.
Management’s forward guidance also proved far more bullish than City analysts had expected. Turnover in 2024 is anticipated to increase by around 18 per cent, while the adjusted operating margin is forecast to expand by some 300 basis points. The shares are now trading on 11 times forward earnings, which still looks fairly cheap given all the excitement.
Our longstanding reservations about the company still stand. Its portfolio isn’t well diversified across disease areas or geographies, and this is normally crucial for a pharmaceutical company. Near-term growth prospects should probably override these concerns – for now. We remain on a buy.
Last IC view: Buy, 1,806p, 27 July 2023
| INDIVIOR (INDV) | ||||
| ORD PRICE: | 1,650p | MARKET VALUE: | £2bn | |
| TOUCH: | 1,626-1,660p | 12-MONTH HIGH: | 1,938p | LOW: 1,125p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 2096 | |
| NET ASSET VALUE: | * | NET CASH: | $34mn | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($mn) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 0.80 | 180 | 18.0 | nil |
| 2020 | 0.65 | -173 | -20.0 | nil |
| 2021 | 0.79 | 190 | 141 | nil |
| 2022 | 0.90 | -95.0 | -38.0 | nil |
| 2023 | 1.09 | 1.00 | 1.00 | nil |
| % change | +21 | - | - | - |
| Ex-div: | NA | |||
| Payment: | NA | |||
| *Negative shareholder funds | ||||
