EFTA01385517.pdf

> Healthcare Deutsche Bank Q Shire Richard Parkes, BUY, close 3875p, 5000p tgt, 29% upside • We expect new long-term targets to help rebuild investor Bull/bear case: blue sky yields almost 45% upside confidence. We expect these targets to reassure that Shire can continue to grow despite headwinds to haemophilia. Between this, execution 6000p 380p 5377p on deleveraging and completion of the Neuroscience Review (at end-17), 5500p -I 817p 258p 216p 4997p IOW 5000p 1 '-' 4523p 11111111•1•11101 the share price should recover. 4500I) 1 31128 :. 400Op 3500p -1 • Synergies and deleveraging should offset headwinds in '18, delivering 3000p -I, m_ revenue growth. Growth of Immunology and from recent launches should 2500p -j 594p 2000p -I drive top-line growth. 1500p .. 7 — i to s e ■ More long-term safety data needed before Shire could be displaced in haemophilia (24% of sales). Hemlibra is a competitive threat to Shire, but a i e majority of patients will need more evidence on safety given safety issues +0 observed in its inhibitors trials. Source: Deutsche Bank ■ Expert feedback suggests Shire will emerge as dominant in HAE with Lanadelumab (launch expected in 2H18). Shares are now very cheap on lyr PE vs. EU Pharma • Shares are far too cheap at just 8x 19E PE and 9x EV/EBITDA. Shire is Shire 1yr fwd PE rel to EU Pharma the cheapest stock in our coverage after '17 underperformance, driven by PE rel to sector (x). 1V fwd 16 Rel to EU Pharma 4yr Ave +1 s.d. earnings downgrades. -1 s.d. ■ Consensus has overlooked new pipeline opportunities. We see positive 1.2 surprise potential on these programmes, particularly if clinical data supports attractive pricing for SHP621 (est. 150k patients in the US alone, many of 0.8 whom have few effective treatments). Related DB Research: 0.4 Shire: Headline HAVEN 3 data incrementally better than anticipated {Parkes( Jan 10 Dec 11 Dec 13 Dec 15 Dec 17 Pharma: 2018 Outlook: Fundamentals solid but fewer debates than in prior years (Parkest Source: Deutsche Bank Deutsche, Bank Research* European. Equity Focus - Jamaiy 2016 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086803 CONFIDENTIAL SDNY_GM_00232987 EFTA01385517