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Biocon share price surges after Morgan Stanley upgrades stock to 'outperform'

The brokerage raised its price target by 25 percent to Rs 465, saying the pharma company’s earnings may have reached a point of inflection after three years of single-digit profit growth

Mumbai / January 19, 2022 / 11:09 AM IST
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The share price of Biocon rose nearly 5 percent to Rs 365.4 on the National Stock Exchange on January 19 after brokerage firm Morgan Stanley India upgraded the stock to "outperform" from an "equal-weight" rating.

The brokerage firm also raised its price target on the stock by 25 percent to Rs 465, saying the pharma company’s earnings may have reached a point of inflection after three years of single-digit profit growth.

Morgan Stanley is of the view that the recent launch of insulin glargine biosimilar in the US, other new product approvals and new manufacturing facilities should be able to drive the earnings growth of the company going ahead.

The brokerage firm expects Biocon’s sales to grow 32 percent on an annualised basis over the next two years. Similarly, it expects the company’s operating profit to rise 45 percent on an annual basis in the same period.

The growth in earnings would be in contrast to the 11 percent annualised growth in sales for the company in the past three years.

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Besides the bullish outlook by Morgan Stanley, the gains in the stock were also supported by the recent report of the merger of the company’s biosimilar business with Mylan’s.

Business news channel CNBC-TV18 earlier this week reported that Biocon may merge Biocon Biologics with Mylan’s biosimilar unit to create a biologics global giant in which the Indian would hold the controlling stake.

The move, if it goes through, will push the biosimilar strategy of Biocon onto the next level as it will be able to more effectively leverage Mylan’s distribution network in developed markets. Biocon already has a multi-year partnership in the development and marketing of biosimilar drugs.

At 11.06 am, the share was trading at Rs 365, up Rs 16.30, or 4.67 percent, on the NSE.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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first published: Jan 19, 2022 11:08 am
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