Moneycontrol News
Cadila Healthcare shares lost as much as 5.6 percent Thursday after Credit Suisse has downgraded the stock to neutral and slashed target price to Rs 465 per share.
The research house also cut its FY19/20 EPS estimates for the company by 3/10 percent to account for Lialda competition.
The competition will increase for the Lialda generic as Teva Pharma also received tentative approval from the US Food and Drug Administration for ulcerative colitis drug. The approval was sooner than expected.
Cadila Healthcare has exclusivity on this drug, which will end on January 14, 2017 while Teva is likely to launch the same drug after January 14.
"While this ensures Cadila remains the sole generic for another two months (other than Authorised generic), overall it is negative as now there is certainty of competition starting January 2018," Credit Suisse said.
Near-term earnings momentum for Cadila is good with Q3FY18 expected to be peak earnings with support from Lialda exclusivity and Tamiflu launch (both suspension and oral), the research house feels.
Lialda is a high contributor accounting for 40 percent of FY18 profits and more than 20 percent of FY19 profits with competition assumed from both Teva and Mylan, the brokerage firm said.
Cadila's revenue could be lower in January-March quarter 2018 due to incremental competition, it feels.
It also feels FY20 earnings for Cadila are likely to be flattish to FY19 as it expects more competition in Lialda in FY20 with competition from Lupin (30-month stay ends in Apr-2018), Amneal (30-month stay ends in Sep-2017) and Osmotica (30 month stay over).
At 12:42 hours IST, the stock price was quoting at Rs 475.00, down Rs 22.20, or 4.47 percent on the BSE.
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!
