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Shire shares hit reverse gear after it cautions on earnings

Shire remains something of a contradiction in terms of general market attitude - said Richard Hunter, head of markets at Interactive Investor
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The company signposted that costs may rise in 2018

Shares in speciality pharma giant Shire PLC (LON:SHP) nudged lower in afternoon trade as analysts got out the red pen in the wake of annual results.

While the figures themselves were slightly ahead of consensus, the outlook was a little weaker than number crunchers had been expecting.

READ: Shire backtracks on a key revenue target and says it plans to separate businesses

US outfit Jefferies said its EPS forecasts would require “trimming”, though it maintained its ‘buy’ recommendation and £49 a share price target.

Share price almost a third in a year

At 1.30pm, the stock, off almost a third in the last 12 months, was changing hands for £31.44, down 1.18% on the day.

Earlier, Shire said total revenues were up 32% at US$15.2bn, aided by a first full year contribution from Baxalta, which it bought for US$32bn. Net income was US$4.3bn.

However, it warned that 2018 earnings could undershoot because of higher costs.

“Shire remains something of a contradiction in terms of general market attitude,” said Richard Hunter, head of markets at Interactive Investor.

“The shares have lost some 30% over the last year as concerns persist, as compared to a drop of 0.6% for the wider FTSE100.

“Despite this underperformance the shares are clearly well regarded as a potential growth story, with the market consensus of the company as a strong buy having been in place for some time.”

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