Cipla zooms 9% on stronger-than-expected Q1; brokerages cheer, raise targets

Cipla’s management also guided for a strong growth outlook across segments for the upcoming quarters, which lifted sentiment for the drugmaker.

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Shares of pharmaceutical major Cipla zoomed nearly 9 percent in early trade on July 27 after the company’s earnings for the April-June period surpassed the Street’s expectations. Several brokerages also raised their price targets for the stock as they cheered for the company’s solid numbers for the quarter under review.

As the company’s bottomline and topline for the quarter topped analysts estimates in Q1, it also prompted the management to raise its margin guidance for the current fiscal to 23 percent from the earlier target of 22 percent.

Moreover, the management also rolled out a strong growth outlook for the coming quarters, forecasting outperforming industry growth in the India prescription business and delivering a quarterly run-rate of $210-215 million in US sales. All the aforementioned positives combined together triggered a positive sentiment around Cipla.

What analysts are saying

At 09.22 am, shares of Cipla were trading 7.9 percent higher at Rs 1,153.05 on the National Stock Exchange.

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Macquarie also supported Cipla’s decision to raise its margin guidance, while the firm also sees scope for more upward revisions to the margin target for FY24. Macquarie has an ‘outperform’ call on Cipla, with a price target of Rs 1,050.

Also Read: Cipla Q1 net profit jumps 45.1% to Rs 996 crore, beats estimates

Foreign brokerage house Nomura liked the management’s decision to raise its margin guidance for FY24 while acknowledging that Cipla’s earnings came ahead of the firm’s estimates . To capture that in, the firm also raised its FY24/25 EPS estimate for Cipla by 3 percent each. Not just that, the firm also raised its price target for the stock to Rs 1,229, while retaining its ‘buy’ rating.

JP Morgan also raised its target price for the stock to Rs 1,210 while it maintained its ‘overweight’ call on the drug maker. The firm sees a robust outlook for Cipla’s key markets, including predictions of a market beating growth for its India business. It also believes a strong pipeline of complex assets will drive Cipla’s growth beyond FY25 in the US market, along with a ramp-up in the market share of existing products.

Also Read: Cipla raises margin guidance for FY24 to 23% on strong Q1

On the other hand, Jefferies chose to upgrade its rating for Cipla to ‘buy’ along with a 34.4-percent increase in its price target for the stock to Rs 1,210. The firm also raised its FY24-26 EPS estimate by 12-20 percent to factor the strong quarterly numbers. Jefferies also remained positive on the management’s strong growth outlook for the coming quarters.

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