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Indivior upgrades full-year forecasts

The specialist in addiction medication improved its operating profit margin and net cash position
July 31, 2017

Management at Indivior (INDV) has raised its full-year guidance after a particularly strong first half, which saw the company's operating margin rise by 7 percentage points to 44 per cent. Indivior, which specialises in medication for opioid addiction, saw improved market growth in the US and fought to maintain market share for its Suboxone Film treatment. Management now anticipates net revenue to be in the range of $1.09bn to $1.12bn, up from its original forecast of $1.05bn to $1.08bn. The upgraded forecasts, combined with lower legal costs and a possible new drug launch, sent the shares up 5 per cent on the release of the figures.

IC TIP: Hold at 375.9p

Suboxone Film’s average market share over the first half was 59 per cent, slightly below the level achieved a year earlier because of “continued competition in more price sensitive payors”. That said, the company has a good product pipeline with the most imminent being RBP-6000, an injection for opioid use disorder which can be administered monthly rather than daily. Under separate cover, the company announced that the US Food and Drug Administration had agreed to Priority Review status for RBP-6000’s new drug application.

Indivior dealt with some of its cumbersome legal costs, settling with Amneal over anti-trust litigation (leading to a $25m exceptional charge). The company's improved net cash position, up 125 per cent, should help it to resolve an ongoing investigation by the Department of Justice.

Analysts at Numis forecast EPS of 37ȼ for FY2017, up from 35ȼ in 2016.

INDIVIOR (INDV)   
ORD PRICE:376pMARKET VALUE:£2.71bn
TOUCH:375.7-375.9p12-MONTH HIGH:392pLOW: 267p
DIVIDEND YIELD:nilPE RATIO:45
NET ASSET VALUE:*NET CASH:$295m
Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (ȼ)
201653117215.0nil
201755321921.0nil
% change+4+27+40nil
Ex-div:na   
Payment:na   
*Negative shareholders' equity  £1 = $1.31