The Week In Review: Hyperactive drug gives Shire a boost

Shire Pharmaceuticals is one of
The Independent's share tips for 2005, and it got off to a roaring start.

Shire Pharmaceuticals is one of The Independent's share tips for 2005, and it got off to a roaring start. By the end of January it had cut a deal to license a promising new drug to treat hyperactivity in children, answering long-standing questions over what happens when its existing hyperactivity drug loses patent protection, perhaps early next year.

The shares are volatile and lost half their gains when Canada banned Shire's current hyperactivity drug, Adderall, which accounts for 45 per cent of group sales. It faces a nervous wait to see if Canada's move has affected prescribing levels in the US. But there is a high chance Canada's decision can be reversed on appeal.

Shire describes itself these days as a "pipeline company", although, by its own admission, it needs to buy in a high number of new drugs. Without them it may not still be growing by the end of the decade. There is often tough competition for such drugs, but at least Shire has cash of £760m. It is a higher risk than most FTSE 100 companies, but its shares are worth buying.

MEGGITT

This diverse specialist engineering company makes parts for civil and military aircraft, and other items including "counter-measures" (things flown or thrown from aircraft to decoy enemy missiles) and remote-control drones used for target practice. Civil aircraft work ought to continue to grow. But military spending cuts are high up the agenda now in Washington, and Meggitt can only hope that fewer new planes will mean more maintenance work on older ones. Hold.

OLD MUTUAL

This financial services group is exposed to currency and political risk, as well as the dangers of a hiccup in the restructuring of its South African bank and questions over its ability to do a useful deal in the UK. Old Mutual shares seem a little ahead of events. Wait.

JURYS DOYLE HOTEL

Shares in Jurys Doyle Hotel have had a strong run in the past year as investors warm to the roll-out of its native Irish hospitality around the UK. Its Jurys Inns are aimed at the cosmopolitan budget traveller, located in city centres with high quality fittings and a contemporary design. There is further room for expansion in the UK. Hold.

PERSIMMON

Have confidence that the housing market will avoid a crash and share prices will stay on an upward trajectory. Persimmon is one of the most highly-valued of all the housebuilders, but that is because it is one of the biggest and best-managed. It is still very cheap relative to the market. Hold.

HAYS

This specialist in the accountancy and finance, construction and IT industries looks well placed to benefit from the upturn in the market. It is expanding and has improved productivity, investing heavily in training and technology. With further share buybacks to come, the stock is worth buying.

RYANAIR

Ryanair is piling on new routes and extra flights, and last week it bought 70 new aircraft that will allow it to double its capacity by 2012. But in a competitive market where it already has a pretty poor reputation for service, it may not take much more bad publicity to send passengers elsewhere. Sell.

ASOS

Asos, which sells copycat celebrity clothing to wannabe Kate Mosses, has struggled to cope with sales which are growing at around 140 per cent a year. Its stock is spread across four warehouses, a cobbled together solution to its fast growth that proved to be inadequate and very badly managed. Until management figures out how to run the bigger business, sell.

MINERVA

The property company Minerva owns a large part of Piccadilly Circus and has grand designs for London's tallest tower. A new chief executive will be charged with selling off some assets and creating joint ventures and standalone property funds. That is the direction in which value-creation lies and the speculative investor might find it lucrative to back the new strategy.

SERCO

Britain has pioneered outsourcing and Serco is one of the more impressive of the companies to be managing vital services such the country's nuclear warning systems, young offenders centres, transport services including London's Docklands Light Railway, and military facilities. You don't see it in the news much, which tells you a lot about how little it messes up. Buy.

ASSOCIATED BRITISH FOODS

Associated British Food's products span Ryvita crackers to Twinings tea, and it also owns Primark, the cheap and cheerful fashion retailer which is expanding its 121-strong UK estate and opening stores in Europe. This column is a long-standing fan of the conglomerate and, although taking profits never hurts, the shares remain a core holding.

Dream duo trebles the profits again

Michael Dobson and Jonathan Asquith, the chief executive and finance director of Schroders, were like the cats who'd got the cream this week, unable to hide how pleased they were with themselves after trebling the fund management group's profits for a second year.

Although, by their own admission, such growth is unsustainable, the results completed one of the City's most impressive turnarounds - for which they deserve credit.

Since taking on what was a basket case three years ago, the pair have stripped out millions in costs, sharpened up their fund management team and started a crucial shift towards more profitable business. Although its lower-earning institutional mandates still account for some two-thirds of assets, its more lucrative retail division now constitutes almost half of new sales.

The question is whether the dream team can drive the business from recovery into its next phase of growth. With £759m of surplus capital waiting to be spent, Mr Dobson is on the hunt for small acquisitions.

The risk in the stock - as with any asset management business - lies in the fortunes of the equity markets.

Mr Dobson's enormous bonus (£1.8m in 2003, and sure to have been even higher in 2004) may also put off some investors. But with the wind well behind it, Schroders justifies a higher share price. Buy.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Property
pets
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Sport
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
    'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

    'Queer saint' who bankrolled artworld giants

    British culture owes a huge debt to Peter Watson, says Michael Prodger
    Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

    Pushkin Prizes brings countries together

    Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
    14 best kids' hoodies

    14 best kids' hoodies

    Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
    Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

    The acceptable face of the Emirates

    Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk