Buy Sun Pharma; target of Rs 920: Edelweiss

Edelweiss's research report on Sun PharmaSun Pharmaceuticals’ (SUNP) acquisition of Insite Vision has started bearing fruits with the company receiving the final approval for Bromsite, likely to be its first specialty ophthal launch in the US. Given that the label includes prophylactic utilisation, unlike competition, the product is likely to corner significant share of the USD400mn market. We reiterate our thesis that FY17 will be the year of transformation for the company in which earnings will accelerate and the move towards specialty will become more apparent (Refer Time to Evolve, dated November 2015). We expect SUNP to once again command premium valuations as specialty initiatives start bearing fruits. Maintain ’BUY’ with TP of INR920. We maintain ‘BUY/Sector Outperformer’ with TP of INR920 (22x FY18E EPS). Owing to its investments in specialty initiatives, we find the company to be best placed to navigate the slowdown in the US generic business. SUNP is our top pick in the sector.

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