Shares of Cipla Ltd fell today after UBS downgraded the stock to "sell" from "buy" and reduces its target to Rs 370 from Rs 470 citing "weak" earnings outlook despite "premium" valuations.
"Our original expectation of earnings accretion through Medpro acquisition has not played out while SG&A (selling, general and administrative) ramp up has been much stronger than we anticipated," UBS said in its note.
Cipla acquired South Africa's Cipla Medpro for $488 million last year.
UBS added that Cipla's pipeline is "weak", and expects research and development costs to rise by fiscal 2015-16.
Copyright: Thomson Reuters 2014
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