May 23, 2018 / 4:24 AM / a month ago

BUZZ-India's Cipla posts biggest intraday gain in over 3 months on Q4 profit

** Cipla Ltd rises as much as 7.8 pct to 564.90 rupees - posts biggest intraday pct gain since Feb 8

** Drugmaker posted Q4 profit of 1.79 bln rupees ($26.24 mln) against a loss of 617.9 mln rupees last year

** HSBC says Cipla remains its preferred name amid ongoing sector headwinds; maintain “buy” rating, lowers TP to 620 rupees from 700 rupees

** Expect margin expansion story to continue on operating leverage driven by U.S. sales ramp-up, better profitability in markets like Europe, and ongoing cost-control initiatives. We factor in about 245 bps improvement in core EBITDA margins over FY 18-20 - HSBC

** Deutsche Bank (DB) believes increase in R&D costs, limited scope for cost savings will cap improvement in EBITDA margin trajectory

** DB factors in about 300 bps improvement in EBITDA margins over next 2 years, driven by traction in US business; cuts TP to 511 rupees from 595 rupees, retains “hold” rating

** Citi remains positive on Cipla’s ability to outperform most peers on earnings traction, given its relatively lower exposure to the United States and improving quality of launches in market; cuts TP to 650 rupees from 680 rupees, keeps “buy” rating

** Macquarie analysts say, with improving sales and margins outlook, Cipla is best placed among large-cap pharma stocks; cuts TP to 636 rupees from 670 rupees, maintains “outperform”

** Twenty-four of 39 brokerages rate the stock “buy” or higher, 12 “hold” and 3 “sell” or lower; their median PT is 645 rupees - Thomson Reuters data

$1 = 68.2050 Indian rupees

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