Dr. Reddy's Laboratories Ltd.'s outlook for fiscal year 2019 hinges on potential launches of complex products in the U.S, according to HSBC. While the drugmaker had guided for 10-12 launches in FY18, HSBC does not expect any significant new products hitting the U.S. market this year.
We believe consensus, including our estimates, largely focused on gNuvaRing, gCopaxone and gSuboxone in FY19 as substantial opportunities to meet earnings growth. Therefore, any positive/negative movement around these assets will be key upside/downside risks to our call.HSBC Research Report
The broking firm increased its FY19 and FY20 earnings per share (EPS) estimates by 6.3 percent and 8.2 percent, respectively, after incorporating Suboxone, used for reducing narcotics consumption.
The stock has corrected around 30 percent since the start of the year on regulatory concerns and lack of significant approvals. The broking firm said the U.S. FDA clearance of the Srikakulam API facility is a big positive for the company while the recent negative observations from the EU regulator for Bachupally and Duvvada add to its woes.
HSBC hiked the stock's target price to Rs 2,430 from Rs 2,286, while maintaining a ‘Hold' rating. The hike in target price implies a potential upside of 12.4 percent from September 8 closing price.
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