Cipla Ltd.’s share price fell to a five-month low on Wednesday after analysts cut their target price on the stock, citing weaker than expected domestic business and challenges in its key products.
The pharma company’s net profit rose 13% year-on-year to Rs 1,305.01 crore in the quarter ended September 2024, according to an exchange filing. That compares with the Bloomberg estimate of Rs 1,247 crore. Revenue for the period rose 5.6% to Rs 7,051.02 crore, compared to analysts’ expectations of Rs 7,068 crore.
Nomura, while retaining a ‘hold’ rating on the stock, has cut the target price on the stock from Rs 1,663 earlier to Rs 1,593, implying a 7.8% upside, citing near-term challenges in key products.
The company’s acromegaly treatment drug Lanreotide may face a temporary supply challenge due to capacity enhancement by a European manufacturing partner, and Albuterol, which is used for respiratory diseases, may face rising competition, Nuvama said.
Pancreatic cancer treatment drug Abraxane’s approval is contingent upon Goa unit clearance, and Revlimid may face higher competition after Bristol Myers Squibb patents expire. “High product concentration risk and near-term challenges in key products,” the brokerage said while noting that three products contribute 20% of estimated FY26 Ebitda.
According to Citi Research, Cipla’s second quarter numbers exceeded expectations, but the underlying trends showed mixed results. Subdued growth in India, at 5% year-on-year, due to a weak season, was negative, while continued expansion in gross margins and solid trends in Africa/EMs were the key positives from the quarter, Citi said.
The brokerage has cut the target price to Rs 1,830 from Rs 1,870, implying 23.9% upside while maintaining a ‘buy’ rating. “We trim our fiscal 2025 growth estimate for India and build delay in certain assets in the US; however, a continued expansion in the GMs and traction in the non-India/US markets limit our fiscal 2025-2027E earnings per share cut to 0-4%.”
Content retrieved from: https://www.ndtvprofit.com/markets/cipla-share-price-falls-to-five-month-low-as-analysts-cut-target-price-after-q2-results.
