Moneycontrol Bureau
Shares of Cipla jumped over 2 percent intraday on Monday as Credit Suisse has upgraded it to outperform. The brokerage has also increased target price to Rs 750 per share and raised FY16E earnings per share (EPS) by 12 percent due to strong Nexium sales.
“Cipla's growth trajectory is expected to change from 10 percent EBITDA CAGR over the last three years to 24 percent EBITDA CAGR. Margins should expand with completion of investment phase and start of monetisation of respiratory portfolio,” it says in a report.
According to the brokerage, Nexium profits leading to strong earnings growth in H1FY16 and approval of generic Advair MDI in UK are strong near-term triggers of Cipla.
Meanwhile, Credit Suisse has downgraded Lupin to neutral stating that change of sector preferences is due to a combination of growth outlook and valuations. It has cut Lupin's FY16/17 EPS by 14/10 percent to incorporate Suprax hit, delay in Nexium and higher research & development. It has also reduced target price to Rs 1585 per share.
The brokerage is concerned that organic sales growth may slow down to mid-teens for Sun Pharma, Lupin and Dr Reddy’s Lab largely driven by increasing base in the US.
At 09:42 hrs Cipla was at Rs 664.30, up Rs 10.60, or 1.62 percent while Lupin was at Rs 1,742.30, down Rs 28.75, or 1.62 percent on the BSE.
Posted by Nasrin Sultana
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