Moneycontrol Bureau
Shares of Cadila Healthcare jumped 5 percent intraday on Monday after Credit Suisse has maintained an outperform rating on the stock. The brokerage has also increased its target price to Rs 1900 per share indicating a 17 percent potential upside.
Cadila is Credit Suisse’s preferred picks due to strong US pipeline and its next key catalyst is Prevacid approval.
It believes that Cadila’s price hike of HydroxyChloroquine (antimalarial drug) after IPCA and Ranbaxy exit will add 15 percent to FY16 EPS. The benefit of higher prices and market share is likely to reflect in December 14 quarter results, it adds.
“After the price increase, the Hydroxychloro market increased from USD 25-30 mn to USD 90 mn, and generics now are priced close to 80 percent of innovator price. Six players have FDA approval on the drug but only four have been active. Among these six players, Cadila is the only vertically integrated and is also the first to initiate price increase on 6 August 2014,” Credit Suisse says in report.
It also expects Cadila to increase market share from 30 percent to 50 percent. At 50 percent volume share, it is hopefult that Hydroxychloro will add Rs10 EPS to FY16 or 15 percent.
At 13:55 hrs Cadila Healthcare was quoting at Rs 1,693.15, up Rs 66.65, or 4.10 percent on the BSE.
(Posted by Nasrin Sultana)
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