Indivior shares under pressure after RBC downgrade
Indivior shares were under pressure on Monday after RBC Capital Markets downgraded its rating following the pharmaceutical’s cautious guidance for 2017.
FTSE 250
19,391.30
17:09 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
Indivior
1,514.00p
16:40 19/04/24
Pharmaceuticals & Biotechnology
21,247.91
17:09 19/04/24
The rating was cut to ‘sector perform’ from ‘outperform’ as Indivior's recent results for 2016 were in line with expectations but the cautious 2017 guidance and the ramp-up launch for its monthly RBP-6000 depot addiction treatment disappointed RBS, though it still hiked its price target to 390p from 370p.
The broker adjusted down the heroin substitute maker’s earnings per share by 10%, which remains above guidance and in line with consensus, while the 13% rise in the price target to 390p reflected the increasing value of assets in its pipeline.
FTSE 250 Indivior adjusted its guidance for this year based on US antitrust litigation which could be “materially higher” than provisions and RBC said that its share price will be dominated by litigation and while shares are optically cheap, underlying movements suggested caution.
RBC highlighted the importance of RBP-6000 and thinks its future lies in its ability to launch and switch patients to the depot before competitor Braeburn can. It now targets total revenue opportunity of $1bn, but believes the launch profile will be slower than first anticipated given “key challenges” that need to be overcome.
The broker moved Indivior’s 2017-18 financial year revenues down between 5% to 3% due to increasing pricing pressure on the residual film business and new product launches, while the the impact on profits is more pronounced with a 10% decline due to ongoing legal costs, which it estimates to be around $50-75m.
It sees meaningful investor returns if Indivior buys complementary products, defends itself from litigation, holds its market share and launches RBP-6000 and 7000 on time, however RBC advises “caution in the near term”.
Shares in Indivior were down 5.77% to 324.70p.