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News & Tips: AstraZeneca, Hutchison China Meditech, Hikma & more

London shares have started the week flat
March 12, 2018

Equities in London began the week flat despite a good showing from the US at the end of last week. Click here for The Trader Nicole Elliott's latest take on the markets. 

IC TIP UPDATES:

AstraZeneca’s (AZN) shareholders are going to have to wait a little longer to find out whether the hotly anticipated Mystic clinical trial has been successful. The study – which is examining the combination of two novel medicines in prolonging the life of non-small cell lung cancer patients – has already failed to halt the progression of the illness and so analysts are expecting very little out of the final data. Still, Astra has got an enormous pipeline of new cancer medicines so we continue to see more potential for share price growth. Buy

Clinical development at Hutchison China Meditech (HCM) has been extensive in the last twelve months. The group has filed its first drug with Chinese regulators and expects launch later in the year, has begun a final phase global trial in partnership with AstraZeneca and has a further five pivotal clinical trials underway. The group is expecting to launch one or two drugs every year and – following its recent US fundraising – has the cash in place to fund the development until 2020. Clinical development has come at a cost to the bottom line (the group dipped back into a loss-making position in 2017), but its commercial platform continues to grow revenues. Buy   

Live data company WANdisco (WAND) has gained co-sell status through the Microsoft One commercial partner program, meaning it can now sell its flagship WANdisco Fusion product into the market as part of a packaged offer with Microsoft Azure. The group’s chief executive and co-founder David Richards says this development with Microsoft “significantly expands our sales channel opportunities”. Shares were up 3 per cent in morning trading. Buy.

Results from eve Sleep (EVE) showed revenue growth of a whopping 132 per cent to £27.7m, with gross margins up by 910 basis points from 48.6 per cent to 57.7 per cent. As expected, marketing costs as a proportion of revenues has fallen, while non-mattress contributions to the top line practically doubled to 13 per cent. However, management has said it wants to take advantage of the good momentum across the UK and Europe, meaning some marketing and investment plans will be accelerated. This means brokerage Peel Hunt has trimmed forecasts for the current financial year, taking group profitability out to FY2019. We remain buyers

KEY STORIES:

The US Food and Drug administration (FDA) has decided that Hikma’s (HIK) unbranded competitor to GlaxoSmithKline’s (GSK) top selling asthma medicine Advair must undergo a further clinical trial. Launch of the drug – which has been developed in partnership with Vectura (VEC) – had already been postponed by the US drugs regulators, but now the two companies are required to provide more clinical evidence before resubmitting. This is another big setback to Hikma’s generics drugs division, especially as a competitive unbranded version of Advair, made by US group Mylan, is now expected to be launched first.

Clarkson (CKN) reported a 6 per cent increase in sales to £324m, with underlying pre-tax profits up 12 per cent to £50.2m. Management attributed this to early signs of recovery across the global shipping market and the company’s market-leading position. The results prompted analysts at Liberum to up increase their target share price, though forecasts are unchanged. Shares were up nearly 2 per cent in early trading.

Shares in Global Ports Holding (GPH) are up more than 6 per cent this morning after the cruise port operator reported increases in passengers, bulk cargo, and throughput during 2017. Group sales were up 1.3 per cent to $116m (£83.7m), with an increase in commercial revenue helping to offset a decline in cruise sales. Operating profit fell due to IPO costs and amortization charges.

OTHER COMPANY NEWS:

It has been a big year of clinical development for Diurnal (DNL) and shares have enjoyed a 56 per cent boost as a result. The group has gained its first European approval from regulators and expects commercial launch in the second quarter. Its hormone drug has also been registered with US regulators and its first patent granted in Japan.

Over the weekend investment platform AJ Bell announced it was exploring a flotation on London’s main market at the end of this year or beginning of next. It is not intending to raise any new money, but the offer will be open to customers residing in the UK.   

On Friday, shortly before market close, Oxford Biomedica (OXB) successfully raised £20.5m via the placing of new shares. The money will be used to increase the group’s capacity to develop lentivectors for use in the pharma industry.

EVR Holdings (EVRH), the creator of virtual reality music content, has appointed Investec as its nominated adviser and corporate broker. The group previously employed Zeus Capital in both capacities. Shares in EVR were up 4 per cent in morning trading.

Waste management company Biffa (BIFF) has appointed Ken Lever chair of the board with immediate effect. He already held the positions of non-executive director and chair of the audit committee - he will be stepping down from the latter. Mr Lever has also been appointed chair of the nomination committee.