UBS has raised the target on Indian pharma stocks, but is has downgraded IPCA.

It has cited higher generic drug prices and brand inflation in United States and rolling over valuation to FY17’s earning estimates.

It says most investors appreciate improving cash generation by Indian pharmaceutical companies, especially the large-caps.

UBS’ new targets

For Cadila Healthcare, it has given buy rating with a new target price of Rs 2,135 against old target price of Rs 2,040.

For Cipla, the rating is neutral and the new target price is Rs 785 (Rs 725)

Dr.Reddy’s Laboratories has been given buy rating with a new target price of Rs 4,150 (Rs 4,000).

For Glenmark Pharmaceutical, it has given buy rating and the new target price is Rs 1,032 (Rs 900).

Lupin has buy rating and the new target price is Rs 2,315 (Rs 1,825).

Ranbaxy Laboratories — Buy — Rs 1,008 (Rs 880), Sun Pharmaceutical Industries — Buy — Rs 1,260 (Rs 1,100), and Torrent Pharmaceuticals — Buy — Rs 1,440 (Rs 1,425).

Also, UBS has downgraded IPCA Laboratories to “neutral’’ from “buy” but ‘has raised the target to Rs 860 from Rs 785.

Fund managers have started churning in favour of defensive stocks like pharmaceuticals, citing India’s weak earnings, outperformance and the Fed risk.