Pharma
Stocks Outlook for the week – 17 to 21.11.2014
( www.rupeedesk.in )
Stocks of frontline drug makers
are likely to see some corrections next week on
account of profit
booking. The pharma stocks had rallied for continuous weeks,
now next week we may see
some selling due to profit booking, although the
outlook is good for the
medium term. The Street will also be taking cues from
post-earnings movements
in specific stocks.
Cipla Ltd, 16.6% fall in
its consolidated net profit for Jul-Sep on shrinking
margins. The company
reported its earnings on Thursday. Given the sharp 39%
up-move post our rating
upgrade in July '14, we anticipate the stock may
consolidate and await
earning upgrade triggers.
India's largest
pharmaceutical company, Sun Pharmaceutical Industries, largely
met estimates by
reporting a Jul-Sep net profit of 15.7 bln rupees, driven by
strong performance of its
arm, Taro.
Hyderabad-based drug
maker Aurobindo Pharma recently announced its decision
to acquire US-based
nutritional supplement maker Natrol Inc, a move which
received mixed responses.
The decision could increase Aurobindo Pharma's
revenues but could also
grow its debt. "We are awaiting further management
clarification on the
financials and strategic plan of the company. Once available,
we would incorporate
potential earnings from Natrol Inc. in our EPS (earnings
per share) estimates of
FY15E (2014-15 estimate) and FY16E (2015-16 estimate).
