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UBS starts Lupin coverage with Sell rating

Published 2024/09/26, 15:42
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UBS has initiated coverage on Lupin (LPC: IN), a pharmaceutical company, with a sell rating and set a price target of INR2,250. The firm recognized that Lupin's strategic shift towards respiratory and injectable products in the U.S. market is showing positive results.

Approximately 35% of the company's current U.S. sales are derived from its respiratory products, which include gSpiriva and Albuterol. Lupin anticipates this segment to grow, expecting it to represent 50-55% of its U.S. sales within the next three years.

The company has a robust pipeline with over 20 respiratory and 40 injectable drug applications pending.

UBS noted the potential for Lupin to increase its market share with gSpiriva, which could help balance the heightened competition faced by its Albuterol product. Despite these positive developments, the sell rating is primarily based on valuation concerns.

UBS suggests that while the consensus may raise its estimates for Lupin, the current stock price has already factored in the anticipated benefits from the launch of Mirabegron, planned for the fiscal year 2025, as well as the prospects of Tolvaptan in fiscal years 2026 and 2027.

The firm believes that any upgrades to consensus earnings per share (EPS) would be largely due to these singular opportunities, rather than a sustained trend.

The price target set by UBS is underpinned by a discounted cash flow (DCF) analysis, which implies a target price-to-earnings (PE) ratio of 30 times the forecasted earnings for the fiscal year 2027.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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