Leading shares are edging higher despite continuing concerns about global growth after the US Federal Reserve left interest rates unchanged, and a 20% fall in RSA Insurance after the collapse of merger talks with Zurich.
Shire is leading the way, up 131p to £48.76 after European regulators approved its Intuniv product as a non-stimulant ADHD treatment for children and adolescents between 6 and 17 years old.
At the same time, Barclays analysts lifted their recommendation from equal weight to overweight and raised there target price from £55.64 to 357, partly on merger hopes. Shire is currently considering its options regarding sweetening its all share offer for US Baxalta, which has been rejected as being too low (worth around a share at the time of the original offer). Barclays said:
[Shire chief executive] Flemming Ornskov remains unperturbed in his desire to grow Shire inorganically and while Baxalta has temporarily stalled we believe the deal makes sense under a share… Elsewhere our work on lifitegrast [a dry eye disease treatment] points to i) .2bn peak sales, ii) likely mid-2016 launch, and iii) £8.80 a share incremental upside from bn peak sales. At current levels Shire looks cheap from a PE (16 times) and PEG (0.9x) perspective, offering nearly double the growth of its EU peers (15% versus 8%) and with an attractive risk-reward, near-term newsflow and earnings per share 6% ahead of consensus we upgrade to overweight.
We are up to 6% ahead of consensus, believe fears over intellectual property challenges are overplayed and already factor in a 6 month delay to lifitegrast approval.
However RSA is down 104.5p at 405p, while Standard Chartered has fallen 24.8p to 697.9p after a negative Financial Times report on its Iranian business.
Overall the FTSE 100 is currently 19.07 points higher at 6123.18, with investors seemingly unconcerned about Alex Tsipras’ victory in the weekend elections in Greece.
As oil prices edge higher, energy companies have moved ahead. BP is 1.5p better at 334.95p while Royal Dutch Shell A shares have risen 9p to £15.91.
Inmarsat has climbed 14.5p to £10.03 after the satellite communications group announced a partnership with Deutsche Telekom and Lufthansa to offer high speed internet access to air passengers.
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