Cipla Q1 Review: Analysts See Earnings Boost After Profit Surpasses Estimates

Shares of Cipla Ltd. surged as much as 8% on Thursday after its first-quarter profit beat analyst estimates, prompting brokerages to raise earnings forecasts.

Here’s what brokerages have to say about Cipla’s Q1 FY24 performance:

• Upgrades to 'buy' from 'hold' with a target price of Rs 1,210 apiece, implying an upside of 15%.

• Superior product mix (strong 9% quarter-on-quarter in the U.S.) amid steady 12% growth in India led margin beat.

• U.S. growth was driven by base business and management commentary had positive takeaways for U.S. generics sector.

• Cipla has increased its FY24 Ebidta margin guidance by 1% to 23%.

• The company revised its U.S. sales run rate guidance from $200 million to $210-215 million.

• Cipla also guided for year-end filing timeline for gSymbicort, Abraxane sales launch by year-end or early next year and FY25 launch for gAdvair.

• The pharmaceutical company expects to launch 4-5 peptide products in the next 2 years.

• In consumer healthcare, Cipla plans to enter new segments of mother and child and skincare, while current presence is in the space of pain, cough and cold and ORS.

• Brokerage increased FY24-26 EPS by 12-20%.

• Upgrade on the back of steady growth in India and ongoing momentum in the U.S.

• Maintains 'neutral' with a target price of Rs 1,130 apiece, implying an upside of 6%.

• Company delivered better-than-expected Q1 FY24 performance.

• It was led by superior executions in North America and domestic formulation segments.

• It is on track to build a complex product pipeline in the peptide space and reduce compliance risk by incorporating alternate manufacturing sites.

• Company raised its ebidta margin guidance to 23% from 22% earlier.

• Cipla indicated an encouraging outlook in U.S. business, driven by reduced competition and subsequently, lesser extent of price erosion.

• It indicated that it filed a new amendment with respect to g-Advair.

• Raised earnings estimates by 6% each for FY24/FY25 to factor in:

  a) Reduced competition in the US generics segment,

  b) Better visibility for niche launches in North America, and

  c) Better operating leverage.

• There has been a healthy revival in outlook for North American markets in addition to better-than-industry performance in the branded generics segment (DF/South Africa).

• However, reiterates 'neutral' rating on limited upside from current levels.

• Downgrades from 'buy' to 'hold' with a target price of Rs 1,150 apiece, implying a downside of 7%.

• Earnings were above expectations, led by lower depreciation expense sequentially and higher-than-expected sales in North America, despite their core product — Albuterol MDI — witnessing volume decline during the quarter.

• Revenue outperformance in North America was offset by subdued performance in South Africa.

• Going forward, the key catalysts for the stock remain successful resolution of compliance issues at Pithampur and Goa facility.

• This should enable an early launch of gAdvair and gAbraxane.

• Cipla has also initiated site transfer of these products, which should allow an FY25 launch in case the compliance issues persist at impacted facilities.

• FY25 forecasts do not build contribution from these launches.

• Slightly tweaked earnings estimates as brokerage raised contribution from gRevlimid in numbers and lowered contribution from South Africa.

• Lower rating considering the limited upside at current market price.