Shire share price: Biopharma group upbeat on 2014 earnings growth

Finance chief to step down in March

Shire share price: Biopharma group upbeat on 2014 earnings growth, Thursday, February 13: Shire Plc (LON:SHP) said that it expected its strong earnings growth to continue this year after posting a 23 percent rise in full-year 2013 earnings on a non-GAAP basis.

Shire’s share price has added about two percent in London trading so far today.

Shire expects strong earnings growth to continue

Dublin-based Shire said today in a statement that its full-year non-GAAP diluted earnings per American Depository Share (ADS) had climbed 23 percent to $7.66 in 2013, with the company expecting similar growth this year. Shire’s 2013 product sales rose 12 percent to $4.76 billion (£2.86 billion) year-on-year while total revenues rose nine percent to $4.93 billion.

Shire however noted that its results had been restated to exclude the Dermagraft business from continuing operations. The company agreed to sell Dermagraft, a bio-engineered skin substitute used to treat diabetic foot ulcers, to regenerative medicine company Organogenesis Inc last month. (Shire share price: Group offloads diabetic leg ulcer treatment assets) The company said that product sales for 2013 including Dermagraft would have been up ten percent while non-GAAP diluted earnings per ADS would have climbed by 21 percent.

Shire’s chief executive Dr Flemming Ornskov attributed the group’s performance to “sharpened strategic focus and strong operational discipline”. Dr Ornskov, who took the helm at Shire in April last year, has been trying to simplify operations and prioritise the group’s portfolio to focus primarily on rare diseases.

We “have a promising pipeline of innovative products,” Dr Ornskov said in today’s statement, adding that Shire expected “further news flow from our pipeline in 2014 from mid and late stage clinical studies.”

Today’s upbeat statement however came after a couple of recent pipeline setbacks with the group reporting last week that its top-selling Vyvanse drug for attention deficit hyperactivity disorder (ADHD) had failed in two late-stage clinical trials to treat adults with major depressive disorders. (Shire share price slides as Vyvanse disappoints in depression studies) In December, Shire’s lifitegrast drug for increasing tear production in patients with chronic dry eyes met only one of its treatment goals.

CFO stepping down

Shire said today in a separate statement that its chief financial officer Graham Hetherington had decided to resign and would step down from the company’s board on March 1. Shire’s Senior Vice President and Group Financial Controller, James Bowling, will be appointed as interim CFO while the company finds a replacement. Hetherington said in the statement that he wanted to spend more time with his family and promised to “continue to take a keen interest in the performance of Shire in the years to come”.

Analysts on Shire

Mick Cooper at Edison Investment Research today told Reuters that Shire’s double-digit sales growth and margin expansion continued “to separate it from most pharmaceutical companies”. Reuters also quoted analysts at Jefferies as forecasting that the group’s 2014 outlook would trigger a three to five percent upgrade in consensus forecasts.

Analyst Ratings Network yesterday reported that Citigroup analysts, who rate Shire as a ‘buy’, had boosted their price target on the stock from 3,200p to 3,600p. Earlier this week, UBS reiterated their ‘neutral’ rating on the biopharma company with a price target of 3,180p, while Morgan Stanley last week reaffirmed their ‘overweight’ rating on the FTSE 100 company with a price target of 3,370p. Shire currently has a consensus price target of 2,549.13p and an average ‘buy’ rating.

As of 14:10 UTC, buy Shire shares at 3183.00p.

As of 14:10 UTC, sell Shire shares at 3181.00p.

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