Dechra Pharmaceuticals is poised to deliver its full year results on Monday. In June it reported revenue growth of 11% in its European pharmaceuticals unit and 18% in North America. It has also been working to integrate some acquisitions, including AST Farma and Le Vet.
The company is a FTSE 250 stock and has a long track record in veterinary medicine that stretches back to the Crimean War. It manufactures medicines for a wide range of animals, from cats and dogs, all the way to farm animals and horses. It employs over 400 people and has overseas subsidiaries in North America and Europe.
CEO Ian Page reported in June that the company was doing well and was trading in line with expectations. He said this was being driven by a combination of a solid core portfolio, good market penetration and recent pipeline launches.
At the time Numis Securities repeated its ‘add’ rating for Dechra Pharmaceuticals and listed a target price for the stock of 2950. The share price is now well beyond that. Since the end of June shareholders of Dechra Pharmaceuticals stock have seen it climb to 3168, a very impressive showing as the market has really got behind a stock which is now close to its 52 week high of 3180.
The shares have been rangebound recently, as traders wait for the new results out on Monday.
We see animal medicines as something of a growth market at the moment – there is the proliferation of companion animals to start with. These are becoming extremely popular, but with them comes the demand for medical treatment. Secondly, regulation of the health of farm animals in both North America and Europe, is picking up, and again there are demands here for better healthcare for livestock.
All this contributes to a market where money is flowing into the drugs sector. It remains a competitive one, but arguably slightly easier to operate in than the human pharma market. We see Dechra as a direct beneficiary of this. It is also thinking internationally and making savvy acquisitions in key markets like New Zealand, which has heavy reliance of agricultural livestock.