This Large Cap Pharma Firm Is Up 5% Today—Analysts See Further 20% Upside

Lupin’s shares were surging on Friday to their highest since April 2017, spurred by Nomura’s optimistic growth projections for the pharmaceutical company.

What Happened: Nomura’s positive outlook was primarily influenced by Lupin’s robust pipeline in the US and its substantial growth in the Indian market. This growth was fueled by strategic initiatives, including the expansion of the field force and a strong foothold in the chronic segment.

In response to the favorable market conditions, Nomura revised Lupin’s earnings per share estimates for the fiscal years 2024 to 2026, hiking them by 2% to 14%. Despite Lupin’s stock already experiencing an impressive 80% surge in 2023, Nomura adjusted the price target upwards to ₹1,593, anticipating an additional 20% upside.

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The Lupin Thesis: Lupin’s strategic focus on high-margin products played a pivotal role in Nomura’s positive projections. The company strategically invested in diverse areas, including inhalation, biosimilars and ophthalmic products.

Nomura foresees potential upsides in the coming three to four years, expecting approvals for ophthalmic drugs and the launch of exclusive products. Additionally, the pharmaceutical company’s expansion into injectables and biosimilars is viewed as another growth avenue.

Key drivers contributing to Lupin’s growth trajectory include the expansion of the field force, a robust presence in the chronic segment and strategic acquisitions. Nomura also pointed out the potential for EBITDA margin expansion, driven by the introduction of new products, stringent cost controls and operational leverage.

The brokerage identified the gradual ramp-up of Lupin’s blockbuster inhalation drug, Spiriva, as a significant contributor to margin improvement. The monthly sales data from IQVIA revealed Spiriva’s generic version as a key factor in Lupin’s recent sales growth in the United States.

Lupin’s consistent gain in market share for Spiriva, reaching 24% after 18 weeks, is noteworthy, the analysts said. The company aims to achieve a market share of 35%-40% over time. Nomura highlighted Spiriva as a substantial opportunity for Lupin, given its market size of $500 million-$600 million.

Price Action: Lupin’s share price was up 5.42% at ₹1,384.00 around noon on Tuesday.

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