Morgan Stanley remains ‘overweight’ on Shire (LON:SHP), arguing that the blue-chip group is ‘undervalued and underappreciated’, WebFG News reports. The comments mark a boost for the rare disease specialist which warned last month that it was expecting slower earnings growth this year.
Shire’s share price has slipped into negative territory in today’s session, having given up 0.15 percent to 3,077.00p as of 10:45 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.27 percent higher at 7,061.61 points. The pharmco’s shares have lost more than 35 percent of their value over the past year, as compared with about a five-percent drop in the Footsie.
Morgan Stanley upbeat on Shire
Morgan Stanley reiterated its ‘overweight’ rating on Shire yesterday. The analysts, however, lowered their valuation on the shares from 5,700p to 4,700p, pointing to setbacks for the pharmco’s ulcerative colitis drug Lialda, market access challenges for its dry-eye treatment Xiidra, threats to the group’s haematology unit, and low visibility on a potential separation of its neurosciences division, all driving a 12-percent cut to the consensus earnings per share forecast for the current year.
“Shire has undoubtedly suffered from negative newsflow and the overhang of competition,” the broker pointed out, as quoted by WebFG News. “We struggle to justify significant absolute downside from here; the stock remains undervalued and underappreciated for its strong delivery.”
Other analysts on blue-chip pharmco
Credit Suisse reiterated its ‘outperform’ stance on Shire today, valuing the shares at 4,000p, while Societe General continues to see the company as a ‘buy,’ with a price target of 7,500p. According to MarketBeat, Shire currently has a consensus ‘buy’ rating and an average price target of 4,950p.