Liberum downgrades Shire, says risk/reward more balanced
Liberum has downgraded Shire to 'hold' from 'buy' and cut the price target to 4,100p from 4,200p, saying the risk/reward is more balanced.
The brokerage noted that since upgrading the stock mid-November on valuation grounds, the shares are up 14% in dollar terms despite better-than-expected competitor haemophilia data and a small pipeline failure on Tuesday, when the company announced that clinical trials for a drug to treat Hunter syndrome in children, SHP609, failed to meet their primary and secondary endpoints.
Liberum had pencilled in around $70m of risk adjusted peak sales for SHP609. Adjusting for the drug trial failure and FX moves - the impact of a stronger pound - Liberum cut its valuation to 4,100p a share, which now implies just 4.5% upside.
"We still believe that, if handled right, the update on the neuroscience strategic review due by year end could be a catalyst for the shares, but with fundamental upside now limited the risk/reward is more balanced."
At 1010 GMT, Shire shares were up 0.7% to 3,947p.