It takes a pretty special FTSE 100 company to see share price rise during the current stock market crash. Hikma Pharmaceuticals (LSD: HIK) has done just that, its shares rising 12% since mid-January, while the index has crashed by up to a third.
Investors expect pharmaceutical and healthcare companies to do well in a crisis, as people still fall ill and need medical treatment as before. Yet the Hikma share price has performed much better than Astrazeneca shares, down 10%, or Glaxo, down 20%.
The Hikma share price performance is therefore highly impressive. While most Stocks and Shares ISA investors are looking to buy bargain stocks at today’s reduced prices, you might want to balance this by investing in a truly resilient business as well.
Up in the stock market crash
Established in 1978, and originally targeting the Middle East and North Africa, Hikma focuses on supplying affordable branded generics and in-licensed medicines. It has expanded by making significant acquisitions in Europe and the US.
On 27 February, Hikma published full-year results showing growth across all three of its business segments: Injectables, Generics and Branded. Core revenue rose 6% to $2.2bn, with group core operating profit up 10% to $508m. Total debt rose 8% to $685m.
That’s history though. What matters today is Covid-19. When it published its results, the epicentre of the pandemic was in China where Hikma doesn’t have extensive operations or manufacturing, and was therefore feeling little impact. The story has moved on to the West but, so far, management has yet to warn of any damage. People still need their medicines.
Resilience on the FTSE 100
I haven’t seen any suggestion it’s working on a coronavirus treatment, so the Hikma share price is unlikely to directly benefit from the crisis.
Hikma enjoyed a boost on 31 March when a US district court ruled in favour of its generic version of heart attack and stroke treatment Vascepa capsules don’t infringe six US patents. It’s now working on a launch. Hikma stock has climbed steadily since then, further helped by the recent stock market recovery.
The FTSE 100 group listed in London in 2005 and now has a market-cap of more than £5bn. Meanwhile, one in every six generic injectable medicines used in US hospitals is a Hikma product. It’s still far smaller than AstraZeneca and Glaxo, but may offer better growth potential.
Hikma holds its AGM on 30 April, but we may see a Coronavirus-related statement at some point this month, which may highlight negative impacts. Either way, it looks more resilient than most FTSE 100 companies today.
The Hikma share price isn’t a bargain by today’s standards, trading at 15.4 times earnings. Its yield is lower than Glaxo and AstraZeneca’s at 1.9%. But generous cover of 3.5 suggests there’s plenty of scope for progression on that front.
Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca and Hikma Pharmaceuticals. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.