Brokerage firm Jefferies has upgraded its rating for drugmaker Zydus Lifesciences to a 'buy' from the previous 'hold' call as it sees a buying opportunity in the stock after its recent correction of nearly 8 percent in the past week. Along with that, Jefferies also raised its price target for the stock, for the second time this month to Rs 1,450, implying an over 30 percent upside potential.
Earlier this month, Jefferies raised its price target for Zydus Life to Rs 1,210. The brokerage firm's investment rationale rests on Zydus Life's strong US pipeline with at least one big launch worth $80-100 million every year. This strong US pipeline along with improved growth prospects in India should lead to elevated sales and margin for Zydus Life, believes Jefferies.
However, the firm also noted that a high reliance on the US generics market makes the company a high-risk, high-reward call due to the nature of its target market.
Follow our market blog to catch all the live action
The drugmaker had delivered a strong set of numbers for the April-June quarter, with EBITDA margin coming at an all time high of 34 percent. Moreover, reflecting expectations of strong growth, the management further guided for a 100-150 basis point EBITDA margin expansion for FY25.
Alongside, US revenue grew 23 percent on year to $373 million, driven by strong contributions from blockbuster cancer drug Revlimid and overactive bladder medication Mirabegron.
FY25 EBITDA margins would see 100–150 basis points expansion, the company guided.
Impressed by the strong quarterly performance, Jefferies had also raised its FY25-27 EPS estimates by 2-5 percent, citing improved sales and margins. The brokerage also noted the potential for an upside surprise from Zydus Life if key products see further growth.
On August 28, shares of Zydus Life closed with marginal gains at Rs 1,113 on the NSE.
Disclaimer: The views and investment tips expressed by investment 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
