Karvy Stock Broking has come out with a research report on Ranbaxy Labs. The research firm has maintained underperformer rating on the stock.
“Ranbaxy has launched Valtrex in US markets. This enables the company to get a 6 month exclusivity for the period in the USD 2.2 billion market. There is no authorized generic (AG) in the market currently but should come in shortly. We believe on account of the launch the company’s earnings upside would go up in CY 2009 by Rs 3 due to absence of AG in this market. However this is a one time opportunity. Further there has been no update on the USFDA re-inspection of the company ‘s Dewas plant. We believe the Valtrex approval re-inforces the company’s ability to protect its First to File (FTF) opportunities”, says Karvy Stock Broking.
The report also says, “On account of the generic Valtrex approval we upgrade the core multiple of the company from 18x to 20x. We value the core EPS of Rs 6.6 of CY10 at 20x and arrive at a price of Rs 132. We also value Nexium API supply opportunity of EPS upside of Rs 5.7 which is a recurring business at 20x and arrive at a price target of Rs 114. In line with the re-rating of the sector we value one time opportunities of Valacyclovir and Flomax upside of Rs 17.8 at 5x and arrive at a price of Rs 89. We also attribute a DCF value of Rs 72 to Lipitor and Caduet opportunity. We hence arrive at a price of Rs 407. Despite the upgrade in price target by 15% to Rs 407 we maintain our Underperformer rating on the stock.”
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