The market is disappointed with softer than expected revenues at Dublin-based UDG Healthcare (UDG) as the stock trades 4.8% lower at 626.5p.
The firm offers outsourced commercialisation services to clients in the healthcare sector.
In the year to 30 September, revenue has increased by 3% to €943.m, while operating profit growth is up 8% to €104.2m.
Investment bank Liberum analyst Graham Doyle says UDG’s revenue is softer in the second half of the year, which has been driven mainly by weaker growth in its Sharp packaging division.
He believes the division will recover in 2017 as the deadline in the US to track and trace products through serialisation approaches.
UDG’s Ashfield division has performed well as operating profit is 7% higher at €63.6m through organic and revenue growth, but its distribution division has struggled.
Reported operating profit in its distribution division Aquilant is 14% lower compared to the prior year, as a result of currency movements and the timing of capital sales activity.
UDG reports that the disposal of the United Drug supply chain businesses and MASTA in April has resulted in a net profit of €132.1m.
Broker N+1 Singer analyst Chris Glasper is upbeat, noting a higher operating margin of 11.1% compensates for the softer revenue growth.
UDG is proposing a 5% increase in its final dividend to 8.5c for a full year dividend of 11.55c per share.
The company has driven down a net debt position of €195.8m last year and currently holds net cash of €128.3m.
