Gland Pharma, Laurus Labs Shares Gain On Jefferies' 'Buy' Rating
Shares of Gland Pharma Ltd. and Laurus Labs Ltd. rose after Jefferies initiated coverage on the drugmakers with a 'buy'.
Dominance in generic injectables, less exposure to pricing risk and ability to increase biosimilar capacity augur well for Gland Pharma, the research house said in a note. Investments in active pharmaceutical ingredients, finished dosage and custom synthesis, and acquisition of biotech firm Richcore Lifesciences’ are growth triggers for Laurus Labs, it said.
Jefferies has set a price target of Rs 4,556 apiece, implying a potential upside of 17.51%, on Gland Pharma. For Laurus Labs, it is Rs 628, implying a potential upside of 20.99%.
Jefferies On Gland Pharma
Initiates coverage with a 'buy', with a price target at Rs 4,556—an implied return of 17.51%.
Gland Pharma's dominance in generic injectables, track record on the U.S. FDA audits, and less exposure to pricing risk augur well.
The company will benefit from economies of scale due to specialisation in injectables.
The company does not face the pricing pressure that other Indian generic firms face and has capabilities to pass on cost pressure, if it emerges.
It has adequate capacity to venture into new markets.
With 1,501 products registered across 60 countries, volume growth and new product launches will aid growth in the U.S. and rest of the world.
The company has pending abbreviated new drug applications and tentative approvals for products worth $7.5 billion.
It can leverage its relationship with promoter, Fosun Pharma, to penetrate into Latin American markets like Mexico.
The company's strategy to increase biosimilar capacity from 10 kl to 60 kl could be a key trigger for growth.
Its growth prospects remain strong with healthy pipeline of products in the U.S.
Values Gland Pharma at 36.5 times FY24E earnings per share; top pick in the sector.
Shares of Gland Pharma rose as much as 2.71%, the biggest intraday gain in over a week, to Rs 3,991 apiece before closing with gains of 1.45%. Of the 17 analysts tracking the company, 13 maintain a 'buy' and two each recommend a 'hold' and a 'sell', according to Bloomberg data. The overall consensus 12-month price target implies an upside of 5.1%.
Jefferies on Laurus Labs
Initiates coverage with a 'buy' and a price target of Rs 628 apiece—an implied return of 20.99%.
Laurus Labs' diversification strategy and investments in API, finished dosage and custom synthesis to drive growth.
Recent acquisition of Richcore is likely to provide the company a launching pad in recombinant animal-free food proteins.
Efforts to ensure self-sufficiency to the custom synthesis business are a major positive.
The company has attained a lion's market share in antiretroviral APIs. API business will now be driven by non-oncology and non-antiretroviral APIs.
Expects API business to grow 8% during FY21-FY24.
Custom synthesis will be a valuation driver with the company's recent tie-up with a European life science player for the supply of niche APIs to drive growth.
Expects Laurus Labs to maintain its leadership position in the market.
The company has initiated a large capex cycle that is expected to double its gross block—total value of assets a company owns.
Builds in 17%/17%/18% revenue/Ebitda/earning per share growth over FY21-24.
Values Laurus Labs at 21.5 times FY24E earnings per share.
Shares of Laurus Labs rose as much as 5%, the biggest intraday gain in over five weeks, to Rs 546 apiece, before ending the session with gains of 1.58%. Of the 13 analysts tracking the company, nine maintain a 'buy' and four suggest a 'sell'. The overall consensus 12-month price target implies an upside of 13%.