Credit Suisse expects Lupin's earnings to stay subdued for 2 quarters before Ranexa & Levo contribute in Q4.
Drug maker Lupin share price rebounded after falling as much as 2.5 percent in early trade on Thursday. Global brokerage house Credit Suisse has downgraded the stock to Underperform from Neutral after weak earnings for the quarter ended June.
The research house also slashed its target price to Rs 715 form Rs 770 per share following cut in FY19/20 EPS estimates by 23/12 percent.
It expects earnings to stay subdued for 2 quarters before Ranexa & Levo contribute in Q4.
Credit Suisse had expected the re-inspection for Goa & Indore plants by September 2018 but is now likely by end-FY19.
JPMorgan has maintained Neutral call on the stock with a target price of Rs 760 after lower US revenues in Q1 that led to margin miss despite lower R&D and other expenses. "Erosion in the US business and margin reset is concerning."
Lupin reported a 43 percent year-on-year decline in net profit to Rs 202.8 crore in the June quarter. PAT was much below analysts' estimates on account of a subdued business in the US and Japan.
The company posted a net profit of Rs 358.1 crore during the same period last year. A Reuters poll of analysts estimated net profit at Rs 347.6 crore in the first quarter on a revenue of Rs 4,084.8 crore.
Total income rose 3.6 percent to Rs 4,040 crore in Q1 FY19.
While the street was estimating earnings before interest, tax, depreciation and amortisation (EBITDA) margin of around 20 percent, the company disappointed at 18.8 percent.
North America, which constitutes 31 percent of Lupin's business, saw sales dropping 26 percent YoY to Rs 1,185.8 crore. On sequential basis, sales dropped 21 percent.
Lupin has been struggling in the US, with lack of significant approvals and competition to its key product Methergine used in treatment of postpartum haemorrhage and metformin franchise Glumetza and Fortamet.At 09:42 hours IST, the stock price was quoting at Rs 837.30, up Rs 11.45, or 1.39 percent on the BSE.