Moneycontrol Bureau
Sun Pharma rose 3 percent intraday Thursday on receiving positive results for two pivotal phase of a drug. It has said that two pivotal phase-3 clinical trials for drug under development MK 3222 (tildrakizumab) which is used to treat psoriasis met initial targets paving the way for a launch in 2019-2020.
Analysts are betting on the pharma major and see the drug lunch boosting its US kitty. Credit Suisse has upgraded the stock to outperform with an increased target price of Rs 925 per share. It has also increased FY17/18 earnings per share (EPS) by 2-4 percent to factor in recent acquisition of products in Japan, launch of Bromsite from InSite and benefit of price increase in the branded portfolio.
However, higher competition in Taro's products, re-inspection of Halol resulting in more observations which could delay earnings recovery from the Halol plant may pose threat to the company, warns Credit Suisse.Bank of America Merill Lynch also maintains buy rating with a target of Rs 960 per share. The brokerage firm, believes the drug can still generate USD 400-500 million sales at peak level for Sun Pharma given dosage convenience and competitive pricing. It also expects its US specialty business to reach USD 1bn revenue by FY21.
Deutsche Bank has a buy rating with a target price of Rs 924 per share. However, it believes the competition in this space could get intense as tildrakizumab nears launch in FY19. While there are three other similar treatment options currently approved and available in the market. Deutsche Bank says Sun’s product offers advantages in terms of lesser dosing frequency. This, along with a benign side effect profile, should help Sun garner some market share, it adds.
Morgan Stanley has an equalweight on the pharma stock.
JP Morgan is overweight on Sun Pharma with a target price of Rs 975 per share. It adds thats encouraging outcome from tildrakizumab should help Sun Pharma target investments in other such large opportunities to building its branded presence in dermatology and ophthalmology in the US market. "The detailed finding from phase-3 trials will be presented at upcoming scientific meetings and we expect focus on regulatory and launch timeline over the next few quarters," it says in a report.
Maintaining outperform, Macquarie has target of Rs 801.65 per share. It says that with strong execution, free cash flow generation and a niche pipeline, Sun Pharma should sustain a premium valuation.
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