Shares of Sun Pharmaceutical Industries Ltd were trading lower on Thursday even after the drugmaker surprised the Street positively, yet again. Sun Pharma delivered robust performance in domestic formulation (DF), specialty portfolio, US generics as well as the ROW market. This was partially offset by subdued show in emerging markets for the quarter. The R&D expenditure remained lower than earlier guidance, partly driving better profitability for the quarter.
Analysts at several brokerage firms have reaffirmed their 'Buy' call on the Sun Pharma stock. BofA raised the target price of the stock while reiterating a 'Buy' view on the stock. Meanwhile, Citi, Motilal Oswal and Nuvama remain upbeat on Sun Pharma's growth prospects and maintain a 'Buy' rating.
Domestic brokering firm Motilal Oswal remains positive on Sun Pharma, given its position as a leading company establishing a robust specialty franchise in developed markets and driving better-than-industry growth in branded generics markets.
The brokerage has raised their earnings estimates for FY25 and FY26 by 4% and 5%, factoring superior execution in global specialty sales, revival in growth prospects in Taro, and an industry-beating growth in the branded generics DF market.
Accordingly, Motilal has arrived at a price target of ₹1,635 per share and reiterated its 'Buy' view on the stock.
JM Financial said that Sun Pharma's annual operating cash flows of over $1 billion and potential access to Taro's rich cash reserves, if the offer sails through, creates room for bolder and bigger bets in the specialty segment (such as Concert).
The key focus area, as per the brokerage, remains derma and eye-care in the US. It expects Sun's specialty sales to sustain double-digit growth momentum given Ilumya's upward trajectory and Deuruxolitinib launch likely next fiscal.
Also, the Street seems to be underappreciating Sun's potential in generics — it has a robust pipeline and resolution of site issues could be a positive trigger, JM Financial said in its post earnings stock review note.
Given the robust specialty outlook, domestic leadership, strong cash position and risk-appetite for large M&As, the brokerage has assumed coverage with a 'Buy' rating and a target price of ₹1,580 a share.
BofA maintains a 'Neutral' stance on the Sun Pharma stock and hiked its target to ₹1,440 from an earlier target of ₹1,370 per share. The brokerage said that the company's US And India growth was positive and the Q3 earnings were in-line with its estimates. There were pulls and pushes in the specialty segment with drugs 'Ilumya' remaining strong while 'Winlevi' missing spark. Earning drivers have been factored-in in its valuation.
Citi has a target price of ₹1,640 per share on the counter, led by 2-5% increase in earnings, multiple raise and roll forward. The brokerage believes the company's margin outlook to be strong.
However, the global brokerage expects a reversal in some factors, operating leverage in specialty and low concentration in the US.
On Thursday, the stock settled 0.76% lower at ₹1,407.65 apiece on the NSE.
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