According to the brokerage firm, the gRevlimid settlement is good for Cipla’s shares as the market did not consider the potential upside prior to this opportunity.
Shares of Cipla Ltd were closed nearly 1% lower today on BSE after the company announced the resolution of its litigation with Celgene Corporation, a wholly owned subsidiary of Bristol Myers Squibb, concerning the patents for Revlimid (lenalidomide ). Most research and brokerage firms are bullish on Cipla shares and are seeing a rise of more than 26%. According to a BSE filing, to resolve all pending claims in the litigation, Celgene agreed to license Cipla for Celgene’s patents needed to manufacture and sell certain volume limited quantities of generic lenalidomide in the United States starting with a confidential date has been a while since March 2022.
Also read: “Neutral” on Cipla, well positioned to deliver a 24% CAGR of earnings
Edelweiss Research analysts welcomed the deal as it brought visibility to FY23 / 24E revenues. For Cipla, the brokerage firm assumed a maximum market share of 10% in the limited volume period. It has revised its target price to Rs 945 from Rs 910 each previously, which implies a nearly 20% rise from the previous close. It is advisable to “buy” Cipla shares.
According to JM Financial Services, the terms of the deal offered to Cipla appear similar to those offered to Dr. Reddy’s and Alvogen with the agreed volume restrictions remaining confidential.
He also recommended “buying” the shares with a target price of Rs 1000 each. It will take Cipla to jump 26.7% from the previous close to reach the target price set by the brokerage. He added that with Cipla achieving dominant market share in gProventil, U.S. growth should now be driven by market share gains from other Albuterol inhalers with Proventil’s share of the overall Albuterol market increasing to 10. % and a favorable competitive landscape post Perrigo’s exit is likely to be a short-term favorable wind.
BOB Capital Market is also bullish on Cipla stock, with a price target of Rs 900, a 14% rise from the previous close. According to the brokerage firm, the gRevlimid settlement is positive for Cipla’s shares as the market did not consider the potential upside prior to this opportunity. “This increases confidence in Cipla’s capabilities and focuses on maximizing the value opportunity in complex generics,” he added.
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