Shire share price: Pharmco to deliver sales growth and lower earnings

Results to come amid takeover buzz

Shire share price: Pharmco to deliver sales growth and lower earnings

Shire (LON:SHP) is expected to unveil sales growth and a fall in earnings for the first quarter when it updates investors on its results this week. The update will come amid a turbulent time for the blue-chip pharmco, which last week rejected a takeover proposal by Japan’s Takeda.

Shire results preview

Shire is scheduled to update investors on its first-quarter performance on Thursday and Proactive Investors reports that Deutsche Bank expects the rare disease specialist to deliver four-percent sales growth helped by a two-three percent currency tailwind. They, however, also expect the pharmco’s non-GAAP earnings per share to have dropped five percent on a reported basis reflecting margin impact from generic competition to the company’s ulcerative colitis treatment Lialda, as well as a drag from Covington setup costs and tough year-on-year comparables from strong gross margin phasing.

Takeover buzz

Shire’s results will come after a turbulent period for the company, which last week disclosed that it had rejected a takeover bid from Japan’s Takeda. Botox maker Allergan further revealed that it had dropped plans to bid for the London-listed rare disease specialist. Reuters quoted Paul Mumford, fund manager at Cavendish Asset Management, as commenting on Friday that it was “disappointing there are not two companies after it, but on the other hand it should spur Shire management to be more proactive and come up with a decent defence and outline their longer term prospects”.

The FTSE 100 company’s results will be preceded by an annual general meeting on Tuesday when the group is likely to face investor criticism over its pay policy, with Pensions & Investment Research Consultants having said that it believes that Shire’s chief executive Flemming Ornskov’s maximum potential bonus is ‘excessive’ at 780 percent of salary, even though he took a pay cut last year.

As of 14:38 BST, Friday, 20 April, Shire PLC share price is 3,824.00p.

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