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Hikma Pharmaceuticals PLC (HKMPY)
OTHER OTC:HKMPY
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Hikma Pharmaceuticals
(OTC:HKMPY)
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Rating:62Neutral
Price Target:
$35.00
▼(-16.71% Downside)
Action:ReiteratedDate:03/03/26
The score is driven primarily by mixed financial quality: improving earnings and margins are offset by deteriorating cash flow and higher leverage. Technicals are a notable drag given the strong downtrend and weak momentum signals. Valuation (low P/E and high dividend yield) and a generally constructive earnings-call outlook, despite near-term margin pressure, provide partial support.
Positive Factors
Diversified business model
Hikma's multi-segment model (injectables, generics, branded) and global distribution reduce single-market dependency and smooth revenue cycles. Over 2–6 months this structural diversification helps absorb regional reimbursement shifts and patent expiries while supporting cross-segment reinvestment.
RTU injectables pipeline and market traction
A sizable RTU pipeline and early commercial traction for TYZAVAN represent durable, high-barrier product expansion in hospital sterile injectables. Capturing share in a large gram market supports sustainable revenue and margin improvement as RTU adoption and conversions increase over multiple years.
Strong underlying profitability and Rx recovery
Sustained group EBITDA near 25% and a historically recovered Rx division imply resilient core economics. Even with near-term investments, higher structural EBITDA and a stable Rx profit base provide durable cash-earning potential and operational leverage as scale and CMO targets are realized.
Negative Factors
Weak cash conversion
Earnings quality is weakened by poor cash conversion: rising gap between net income and free cash flow limits capacity to self-fund capex, debt paydown or buybacks. Over the medium term this raises refinancing and flexibility risks if cash generation doesn't recover with margins.
Rising leverage and debt increase
Material debt increases and higher debt/equity reduce financial flexibility and elevate interest and covenant risk if operating cash flow weakens. This structural leverage makes the company more vulnerable to execution slippage or delayed cash recovery from investments and capacity projects.
Injectables margin reset and delayed capacity benefits
A durable margin reset in injectables and pushed-out capacity/lauch timelines compress near-to-medium term profitability. Given injectables' importance, multi-year margin drag and late 2020s capacity inservice delays will postpone expected cash flow and CMO revenue upside for several years.
Hikma Pharmaceuticals (HKMPY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.56B
Dividend Yield4.04%
Average Volume (3M)576.00
Price to Earnings (P/E)11.5
Beta (1Y)0.49
Revenue Growth7.03%
EPS Growth31.08%
CountryUS
Employees9,500
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)1.49
Shares Outstanding110,153,854
10 Day Avg. Volume104
30 Day Avg. Volume576
Financial Highlights & Ratios
PEG Ratio0.89
Price to Book (P/B)1.78
Price to Sales (P/S)1.38
P/FCF Ratio28.48
Enterprise Value/Market Cap1.38
Enterprise Value/Revenue1.47
Enterprise Value/Gross Profit3.52
Enterprise Value/Ebitda5.55
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Hikma Pharmaceuticals Business Overview & Revenue Model
Company DescriptionHikma Pharmaceuticals PLC develops, manufactures, markets, and sells a range of generic, branded, and in-licensed pharmaceutical products. The company offers its products in solid, semi-solid, liquid, and injectable final dosage forms. It operates through three segments: Injectables, Generics, and Branded. The Injectables segment provides generic injectable products primarily for use in hospitals. The Generics segment offers oral and other non-injectable generic products for the retail market. The Branded segment offers branded generics and in-licensed products to retail and hospital markets. The company provides its products in various therapeutic areas, including anti-infective, cardiovascular, central nervous system, diabetes, oncology, pain management, and respiratory. It operates in the United Kingdom, the United States, the Middle East, North Africa, Europe, and internationally. The company was founded in 1978 and is based in London, the United Kingdom.
How the Company Makes MoneyHikma Pharmaceuticals generates revenue through multiple key streams. The Injectables segment is a significant contributor, providing high-margin products that are essential for hospitals and healthcare facilities. The Generics segment offers a variety of off-patent medications, capitalizing on cost-effective solutions for patients and healthcare systems. The Branded Pharmaceuticals segment focuses on proprietary products, which typically command higher prices compared to generics. Additionally, Hikma engages in strategic partnerships and collaborations with other pharmaceutical companies, enhancing its product offerings through licensing agreements and co-development projects. The company also benefits from its global distribution network, allowing for a broad reach in diverse markets and contributing to its overall revenue growth.
Hikma Pharmaceuticals Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call outlines a clear strategic reset with substantial near-term investment (R&D, sales/marketing, capacity) and reorganizational changes that are expected to depress some margins and delay certain revenue ramps through 2026. At the same time, the company presented multiple concrete positives: solid group EBITDA (25%), a recovered Rx division (~20% margins and strong EBIT history), meaningful branded and MENA growth, an expanding RTU pipeline with encouraging early traction (TYZAVAN), a plan to materially grow CMO over the medium term, and a GBP 250m buyback. Management expresses confidence in returning injectables to stronger growth by 2027–2028 once investments and capacity projects (e.g., Bedford) come online. Overall, strategic actions and long-term prospects appear to outweigh near-term operational headwinds.Q4-2025 Updates
Positive Updates
Strong overall profitability
Group EBITDA margin at ~25%, ahead of many competitors targeting ~22%, indicating robust overall profitability and cost structure.
Rx turnaround and margins
Generic/Rx business recovered under prior leadership to deliver ~GBP 200m EBIT historically and margins close to 20%; management expects continued solid performance and further margin improvement over time.
MENA and Branded growth
Hikma #1 in MENA this year; MENA reported strong growth and margins; Branded business guiding at ~7%–8% growth (up from prior ~5%–6%), and management signing multiple licensing/partnership deals (6 new biosimilars in MENA).
Injectables ready-to-use (RTU) platform progress
Pipeline of ~15 RTU products with TYZAVAN launch momentum described as 'active and encouraging' — TYZAVAN has already converted ~13% of the vancomycin gram market; large addressable market (~41m grams) and existing customer base penetration (~15% of sites).
Increased R&D commitment
Corporate R&D budget elevated and centralized with target spend of ~5%–6% of group sales; year-over-year R&D increase reported at roughly $45m and injectable-specific R&D up ~GBP 15m versus prior year to support pipeline and long-term growth.
CMO and capacity expansion plans
Rx CMO revenue ~10% this year with target to reach ~20% by 2030; Bedford (acquisition/Xellia) and Cherry Hill capacity projects underway to capture US onshoring demand, supporting medium-term CMO growth.
Capital allocation and shareholder returns
Board approved a share buyback of GBP 250m this year, signaling capital return intent alongside reinvestment plans.
Operational improvements and hiring
Management has reorganized to centralize R&D, hired new commercial and supply-chain leaders, and committed to devolved decision-making to accelerate investments, shorten decision cycles and reduce bottlenecks.
Negative Updates
Injectables margin and near-term weakness
Injectables margins have reset materially — described as moving from mid-30s historically to high-20s now, with a cited near-term 2–3 percentage-point headwind driven by higher R&D, sales & marketing and CMO dynamics; management expects recovery only from 2027/2028.
Reduced CMO contribution in 2025/2026
Lower CMO revenue/contribution in 2025 due to at least one major customer shifting domestic manufacturing to the U.S.; this reduced CMO work weighed on short-term injectables performance.
Product launch delays
Several injectable product launches were pushed into later years (some momentum moved into 2027 and key RTU launches expected in early 2028), delaying expected revenue ramps and near-term growth.
Near-term margin pressure from investment centralization
Centralizing and increasing R&D (and increasing sales/marketing spend) will depress divisional margins in the short term (management explicitly removed R&D from divisional P&Ls), contributing to the lower injectable margin profile.
Higher reliance on third-party supply reducing profitability
Use of third-party supply for injectables reportedly increased from ~20% to ~30%, lowering overall profitability because third-party production is less profitable than in-house manufacturing.
Bedford/site reengineering timeline
Bedford site requires reengineering and new lines that typically take 1.5–2 years to install, qualify and obtain regulatory approvals, so meaningful CMO capacity benefits are expected only from 2028 onward.
Execution and communication criticisms
Management acknowledged past over-focus on short-term margin targets and slow decision-making; investors flagged delays to the buyback and asked for clearer medium-term guidance, which the company deferred to a later update.
One-off product drag (historical)
Sodium oxybate (Xyrem) previously dragged down Rx profitability but management negotiated improved terms for this year and next to reduce the negative impact.
Company Guidance
Management reiterated confidence in FY26 guidance while warning of near‑term investment‑led margin pressure: group EBITDA is c.25% (versus peers targeting ~22%), R&D is being centralized and ramped to c.5–6% of sales (management cited ~$45m y/y uplift in R&D and ~GBP15m extra injectables R&D), injectables margins have been reset from mid‑30s to the high‑20s (the prior 30% “floor” was removed), and injectables are expected to bottom in 2026 with recovery from 2027 and stronger CMO and RTU-driven growth from 2028 (Bedford/Xellia capacity planned online in 2028); pipeline metrics highlighted TYZAVAN and ~15 RTU products, vancomycin market ~41m grams (13% converted already), Europe injectables grew ~23% this year, Rx is delivering ~20% margins with CMO today ~10% of revenue (targeting ~20% by 2030), branded MENA growth is being guided at ~7–8% with six new biosimilars signed, the group still views an aspirational GBP5bn revenue target for 2030 as achievable, and the board has approved a GBP250m share buyback this year.Hikma Pharmaceuticals Financial Statement Overview
Summary
Revenue and profitability improved in 2024–2025 versus 2023 (stronger operating and net margins), but the profile is held back by weakening operating/free cash flow and poor cash conversion (FCF well below net income) alongside rising leverage from 2023 to 2025.Income Statement
Revenue has trended up over the past few years (2023–2025), with 2025 growth accelerating versus 2024. Profitability is solid in 2024–2025, with improved operating and net margins versus 2023, indicating better execution and/or mix. However, margins remain below the 2020–2021 peak levels, suggesting the business has not fully regained prior profitability.72
Positive
Balance Sheet
The balance sheet looks generally stable with meaningful equity and improving returns on equity versus 2022–2023, back to mid-teens in 2024–2025. Leverage is moderate but has risen over time: total debt increased materially from 2023 to 2025 and debt relative to equity has moved higher versus 2020–2021, which reduces flexibility if earnings or cash flow weaken.67
Positive
Cash Flow
Cash generation has weakened recently: operating cash flow declined in 2024–2025 and free cash flow dropped sharply in 2025 (negative growth), which is a key concern despite higher reported earnings. Free cash flow covers less than half of net income in 2024–2025, pointing to weaker cash conversion and raising the risk that profitability is not fully translating into cash available for debt reduction, reinvestment, or shareholder returns.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.36B | 3.13B | 2.88B | 2.52B | 2.55B |
| Gross Profit | 1.34B | 1.42B | 1.41B | 1.24B | 1.30B |
| EBITDA | 837.95M | 727.00M | 559.00M | 688.00M | 766.00M |
| Net Income | 402.94M | 359.00M | 190.00M | 188.00M | 421.00M |
Balance Sheet | |||||
| Total Assets | 5.67B | 5.13B | 4.68B | 4.47B | 4.37B |
| Cash, Cash Equivalents and Short-Term Investments | 354.00M | 213.00M | 229.00M | 292.00M | 450.00M |
| Total Debt | 1.65B | 1.31B | 1.19B | 1.28B | 846.00M |
| Total Liabilities | 3.06B | 2.81B | 2.47B | 2.32B | 1.91B |
| Stockholders Equity | 2.59B | 2.31B | 2.20B | 2.13B | 2.45B |
Cash Flow | |||||
| Free Cash Flow | 162.38M | 329.00M | 404.00M | 305.00M | 409.00M |
| Operating Cash Flow | 359.84M | 564.00M | 608.00M | 530.00M | 638.00M |
| Investing Cash Flow | -394.92M | -381.00M | -333.00M | -607.00M | -238.00M |
| Financing Cash Flow | 58.14M | -188.00M | -337.00M | -58.00M | -287.00M |
Hikma Pharmaceuticals Technical Analysis
Negative
42.02
Price Trends
40.81
Negative
42.04
Negative
46.35
Negative
Market Momentum
-2.81
Positive
22.63
Positive
2.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HKMPY, the sentiment is Negative. The current price of 42.02 is above the 20-day moving average (MA) of 39.02, above the 50-day MA of 40.81, and below the 200-day MA of 46.35, indicating a bearish trend. The MACD of -2.81 indicates Positive momentum. The RSI at 22.63 is Positive, neither overbought nor oversold. The STOCH value of 2.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HKMPY.
Hikma Pharmaceuticals Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $11.99B | 21.72 | 16.00% | 0.64% | 10.63% | 6.35% | |
63 Neutral | $35.77B | 25.43 | 20.09% | ― | -0.25% | ― | |
62 Neutral | $3.56B | 11.48 | 15.47% | 4.04% | 7.03% | 31.08% | |
56 Neutral | $16.08B | -4.15 | -22.99% | 3.99% | -6.40% | -320.23% | |
54 Neutral | $4.00B | 54.80 | -67.91% | ― | 9.50% | ― | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
50 Neutral | $1.35B | -1.35 | -35.16% | 8.48% | -2.55% | 66.00% |
* Healthcare Sector Average
HKMPY
Hikma Pharmaceuticals
32.56
-19.45
-37.40%
RDY
Dr Reddy's Laboratories
14.54
2.07
16.63%
VTRS
Viatris
13.97
5.14
58.25%
PRGO
Perrigo Company
9.81
-15.89
-61.82%
TEVA
Teva Pharmaceutical
30.47
13.99
84.89%
AMRX
Amneal Pharmaceuticals
12.71
3.83
43.13%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.