At the end of November, we argued that Shire (SHP) had become too cheap, with its shares trading on just 10 times forward earnings. The market seems to have agreed and, despite a few disappointing updates, shares are already up 7 per cent on that tip. Even the failure of a pivotal trial into a potential treatment for Hunter syndrome hasn’t put shareholders off. After taking the drug, SHP609, children with the genetic condition didn’t report any difference in their cognitive function.
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But this failure is only a minor setback for Shire. Broker Jefferies has trimmed its revenue and earnings forecasts by less than 1 per cent between now and 2021 and consensus expectations are for 5 per cent compound annual revenue growth between 2018 and 2022.
