Drug developer Indivior (LSE: INDV) was set up in 1994 to pioneer treatments for opioid dependence and three years after floating now boasts a market cap of £2.9bn. However, it suffered a major blow at the end of August, its share price crashing 40% after the District Court of Delaware allowed the marketing of Dr Reddy’s, a rival, generic version of Indivior’s Suboxone film treatment for opioid addiction that generates 80% of its revenues.
Indivior has since recovered and remains a great growth stock for shrewd investors. At 400p its share price is only 4% below its pre-crash level, as investors decided the damage may not be so severe after all. As well as the pill, the group also offers patient management, and is working on new projects and building relationships to hang onto its market share and diversify from its main product. All is not lost.
Today the company published its nine-month financial results and full-year guidance, with the share price up 0.65% in consequence. There are positives in there, with net revenue up 4% to $828m year-to-date, as strong US market growth offset generic competition. Operating profit jumped from $78m to $308m on higher net revenues and lower R&D and legal expenses, with adjusted operating profit up 6% to $333m. The company’s net cash now stands at $322m, up from $131 in full-year 2016.
Indivior is appealing the Delaware ruling on its generic rival so investors must allow for the uncertainty surrounding the outcome. The other development to watch is its promising pipeline, following its successful NDA submission of RBP-7000 in schizophrenia and the endorsement of the FDA’s Psychopharmacologic Drugs Advisory and Drug Safety and Risk Management Advisory Committees for RBP-6000.This is the group’s “potentially transformational” product for the treatment of opioid use disorder.
Today’s forecast valuation of 11.4 times earnings reflects the uncertainty, with City analysts expecting earnings and revenue volatility going forward. The share price stands 95% higher than two years ago and it remains tempting, but only if you understand all the risks.
Business media giant Informa (LSE: INF) has also enjoyed a strong growth spurt, its share price up 85% over five years and 32% over two. Recent half-yearly results showed pre-tax profits rising 50% to £148.8m with revenues up 41.3% due to strong trading in its global exhibitions division. It is nice to see somebody making money from publishing, aside from Facebook.
Global exhibitions now make up 37.4% of the group’s total revenue after rising an impressive 77.7% to £342.8m. There was good news for income investors as well with the interim dividend increase 6.2% to 6.65p. The yield is still a relatively lowly 2.79% but the board is showing progression on this front.
I have just been reading this £5.9bn FTSE 100 firm’s earnings per share (EPS) growth history and I have rarely seen one more consistent, with five consecutive years of low-single-digit growth. Markets are forecasting more action with 10% growth in 2017 and 7% in 2018.
The forecast yield is 3%, handily covered 2.3 times. Today you can buy Informa at a fair 14.8 times earnings, which suggests that this growth stock could be a bargain. It may not promise spectacular returns, but it looks extremely solid.