Lupin stock hits 52-week high on JPMorgan upgrade to 'overweight'

Lupin reported strong all-round performance in the April-June quarter.

Shares of drugmaker Lupin rose over 3 percent to hit s 52-week high of Rs 2,119.3 apiece on August 9 after global brokerage JPMorgan upgraded its rating on the stock following the company's strong Q1FY25 results.

JPMorgan upgraded Lupin to an 'overweight' call and also raised its price target for the stock to Rs 2,400, forecasting an upside of over 17 percent from the previous close. The upside potential seen by JPMorgan is on top of the sharp run up seen in the counter in the past here as it delivered over 90 percent returns.

Justifying its actions, JPMorgan stated that it believes Lupin has more legs to grow despite its significant outperformance in the past year.

This outperformance by Lupin was driven by accelerating momentum in its US business backed by the launch of blockbuster respiratory drug Spiriva, along with support from several product launches and a stable generic pricing environment.

Supporting the case of a robust growth outlook for Lupin is its India business, which is also inching back to double-digit growth, alongside an improvement in the company's core, business margin, JPMorgan wrote in its note.

On top of that, JPMorgan also feels that Lupin has a solid US drug pipeline, with several key products driving a 13 percent revenue CAGR in the US market over FY24-27.

JPMorgan also expects Lupin's core business margins to improve nearly 400 basis points to 22 percent in FY27 and predicts a 29 percent core earnings CAGR for the drugmaker over FY24-27.

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Just like JPMorgan, several other brokerages on the Street also share an optimistic outlook for Lupin. One such brokerage is Nuvama Institutional Equities, which also upgraded the stock to a 'buy', raising its price target for the stock by nearly half to Rs 2,368.

Nuvama cited that its upgrade was on expectations of a  further improvement in Lupin's India and US business, despite the sharp run-up in the stock. It also believe Lupin's India growth outlook is very attractive. "US product launches are likely to continue and we highlight Lupin is only large-cap pharma without cancer drug Revlimid in the US," Nuvama stated.

Additionally, the brokerage believes Lupin could continue to deliver earnings surprises, as US margins have now surpassed the company average and a range of new launches is anticipated.

The drugmaker reported a 77 percent year-on-year spike in its net profit at Rs 801.3 crore for Q1FY25. Revenue grew by over 16 percent to Rs 5,514.30 crore driven by strong sales in both India and the US. The company's EBITDA margin also improved significantly, swelling up 527 basis points to a multi-quarter high of 23.3 percent.

Also Read | Lupin stock soars to 52-week high on strong all-round Q1 show

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