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Shares of Dr Reddy's Laboratories fell as much as 3.2 per cent to Rs 1,945 on bleak Q4 show. The company had on Tuesday posted 19 per cent drop in net profit, lagging estimates, owing to headwinds in the US market.
Credit Suisse analysts say Q4 was a big miss of 25 per cent on EBITDA and potential delay of Nuvaring by another quarter to H2 FY19 does not help. It says that the next two quarters should stay weak, and it expects pressure in US sales to continue. The brokerage has kept “underperform” rating with a target price of Rs 1,865.
Morgan Stanley sees monetisation visibility over next 12-18 months from niche complex products, some mid-sized launches plus focus on cost optimisation coupled with reasonable valuations. It has kept “overweight” rating and a target price of Rs 3,465.
Deutsche Bank believes delay in launch time-lines of key products in the United States will weigh on near-term outlook and investor sentiment towards stock; it has kept “hold” rating, and has cut the target price to Rs 1,892 from Rs 2,310.
Citi has cut FY19/20 EPS estimate by 20/9 per cent on further delays in key US launches and continues to keep generic version of its opioid addiction treatment - Suboxone - outside forecast, given the legal challenges; it has cut the target price to Rs 2,150 from Rs 2,430, and has maintained “neutral” rating.
Macquarie has cut FY19/20 EPS by 14/5 per cent on lower US sales and adds uncertainty over resolution timelines of US FDA warning letter at Duvvada and Srikakulam API continues to be an overhang; it has cut the target price to Rs 2,094 from Rs 2,330 with “neutral” rating.
Goldman Sachs has cut 2019-2020 EBITDA estimates by up to 5 per cent; it says that it will maintain “neutral” rating as uncertainties around key launches still remain; the brokerage has cut the target price to Rs 2,220 from Rs 2,380.
Dr Reddy’s stock was down 16.8 per cent this year, as of Tuesday's close. Nineteen of 42 brokerages rated the stock as “buy” or higher, 13 “hold” and 10 “sell” or lower; their median target price is Rs 2,420, according to Thomson Reuters data.
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