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May 29, 2013, 03.05 PM IST | Source: Moneycontrol.com

Jefferies raises Sun Pharma target price after a strong Q4

Jefferies maintained a "buy" and raised its target price on Sun Pharma after its fourth quarter results beat street expectations. UBS, meanwhile, has a "neutral" rating.

Moneycontrol Bureau

Jefferies maintained a "buy" rating and raised its target price on Sun Pharmaceutical Industries on Wednesday to Rs 1,150 from Rs 870, following strong fourth quarter earnings by the drug maker.

The company reported a better-than-expected 23 percent jump in Jan-March quarter net profit at Rs 1012 crore and net sales rose 32 percent to Rs 3087 crore.

"Sun reported another strong quarter, with revenue and adjusted margins ahead of our expectations. Management guidance of 18-20 percent revenue growth is better than our expectation. Going forward we expect improvement at URL to partly offset impact of higher competition at Taro," Jefferies said.

The URL portfolio provides strong near-term growth opportunities for the company, it added.

UBS meanwhile maintained its "neutral" rating on the stock as the firm believes the current valuation at 24 times price earnings multiple of expected FY14 EPS looks fair and already builds in a premium for management’s strong execution track record.

"We believe with the current large contribution of key limited competition drugs (40 percent of FY14 expected EPS) the current valuation at 24 times FY14 expected PE looks fair and already builds in a premium for management’s strong execution track record," it said.

Avendus Securities maintained its "hold" rating on the stock, but raised its target price to Rs 980 from Rs 798. It also raised its profit estimates on Sun Pharma for FY14 and FY14 by 11 percent each and revenue estimates by 8-10 percent.

Sun Pharma hit a life high of Rs 1,080.70 on NSE on Wednesday. It was up 6.7 percent at Rs 1,062.90 in late trading.

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