Cipla shares rose about 11% in three sessions after the U.S. Food and Drug Administration tagged the company’s Goa facility as “voluntary action required.”
This is a significant development for the company, as Citi Research’s post-earnings report said approval of its pancreatic cancer drug Abraxane was contingent on approval from its Gore unit.
Prior to this, the stock price had fallen after the company’s September quarter results as analysts lowered their price targets, citing lower-than-expected domestic business results and issues with core products.
However, Nomura upgraded Cipla stock to ‘buy’ in a recent report and raised its price target from Rs 1,580.90 to Rs 1,800 per share, implying a 16% upside. VAI said the Goa facility was cleared by the FDA as it increases the chances of approval of gAbraxane with limited competition.
Despite the stock’s 29% rise in the past year, this is behind Nifty Pharma’s 54% rise, the brokerage said. Citing downside risks such as lower-than-expected growth in India, weaker U.S. earnings, and rising pricing pressures, the report said, “From a risk-reward perspective, expected returns of 6-21% over a one-year period are One company, Cipla, has an advantage.”
