Edmund Shing explains why now is a great time to invest in UK pharmaceutical firm Shire.
1) FTSE 100 healthcare company
Shire is a FTSE 100 company (UK code: SHP) and is in the healthcare sector.
2) Drug maker
It develops and markets drugs such as Adderall and Vyvanse for attention deficit hyperactivity disorder (ADHD), particularly in children.
3) Generating growth
The company is generating growth not only from the development and marketing of drugs, but also by acquiring other drugs companies. It is in the process at the moment of buying rival company Baxalta, which will drive profit growth going forwards.
4) Potential takeover target
It has also been the target of an acquisition by other companies. In the past American pharma giant Pfizer tried to buy it by bidding over £50 a share. It's worth noting that today's share price for Shire is only £36, nearly 30% below that bid price.
5) Terrific value
Shire is a cheap growth company. Earnings are still growing strongly, thanks to drug growth and at the same time it is trading on a P/E Ratio (TTM) of 17.87 (as of 18 February 2016), which is remarkably cheap for the company as it was over 20 not long ago.
Edmund Shing is Global Head of Equity Derivative Strategy at BNP Paribas in London. He holds a PhD in Artificial Intelligence.