Pharmaceutical stock down 25% from highs. Brokerages have a “Buy” tag

During his investor day, Dr Reddy’s recalled his objectives of 25%/25% EBITDA/ROCE and specified the levers that will enable them to be achieved. Dr. Reddy is targeting sustainable double-digit revenue growth and plans to expand existing businesses and pursue new opportunities such as Biologics CDMO & CGT, Jefferies noted in a note.

The global brokerage has a buy tag on Dr Reddys shares with a target price of 5,036 each. So far, the pharmaceutical stock is down 13% in 2022 (YTD) and is trading around 25% below its 52-week high.

Dr. Reddy’s also highlighted its US pipeline and said it would work to build a more integrated upstream business. The pharmaceutical major plans to expand its existing business, which it says will help generate growth in the short to medium term.

“Dr. Reddy’s has identified 3 pillars to achieve its goal: Leadership in Select Spaces – Economy of Scale, Complex, Clinically Differentiated Brands and Products, Productivity – Digitization and Automation, Operational and Business Excellence, Continuous Improvement and Innovation,” said added Jefferies.

National brokerage and research firm Motilal Oswal is also bullish on pharma stocks thanks to niche launches in US generics, leveraging its portfolio globally, increasing upstream integration as well as cost control. He maintained the Buy rating on DRL with a target price of 4,950.

In addition to enhancing the franchise of existing brands, Dr. Reddy’s continues to offer a differentiated portfolio through organic and inorganic means to accelerate growth prospects in domestic formulation.

Dr Reddy’s plans to expand into EU5 – Germany, UK, Spain, France and Italy, selective geographic expansion; & launch more FTFs. In the long term, the pharmaceutical company plans to venture into biosimilars and new spaces such as pharmaceutical cannabis.

“Based on its product portfolio with limited competition in the US market, strong core therapies in DF and the stock’s attractive valuation, we are maintaining our buy rating,” the house’s rating reads. brokerage.

The consolidated after-tax profit of Dr Reddy’s Laboratories Ltd. for the fourth quarter ended March 2022 fell 76% to 87 crore, compared to 362 crore a year ago, mainly due to depreciation costs.

The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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