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Low on revenues, high on margins. Lupin’s 3QFY15 results were mixed as revenues missed estimates on the back of a second straight miss for US generics division as Cymbalta and Niaspan price erosion impacted base comparison and offset Celebrex launch. Despite the decline in these high-margin opportunities, gross and EBITDA margins surprised positively with +150 bps qoq swing. We see the decline in US sales as a temporary blip and expect continued momentum on the back of US launches over FY2016/17E. Reiterate BUY rating with revised TP of `1,700 (`1,600 earlier).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Miss on revenues driven by Cymbalta and Niaspan 3QFY15 marked a period of two successive quarters of US miss, which is a rarity for LPC. The miss in the US was largely driven by continued competitive pressures from Cymbalta and Niaspan, and lack of new launches in the quarter. On our estimates, given Celebrex contribution in 3QFY15, Lupin’s base business would have contracted by US$20 mn qoq despite the onset of peak season for its cephalosporins portfolio in 2H. Ex-US, Lupin saw weak growth across divisions, driven by cross-currency impact with South Africa (9% INR versus 19% ZAR), Japan (-8% INR versus 4% JPY) along with India and Europe performing strongly at 14% yoy and 22% yoy respectively. Despite the US miss, EBITDA margins at 27.8% (+160 bps qoq) surprised positively, led by gross margins (67.8%; +150 bps qoq) and lower R&D spend. Nexium launch on the cards; could meaningfully add to growth According to Lupin management, they have responded to the FDA on all queries and are awaiting the final approval. Even as management is hopeful of a launch in 4QFY15, we build Nexium launch from 1QFY16. Given the evolving competitive dynamics, we expect Nexium to now contribute US$60 mn in FY2016 (versus US$30 mn earlier), declining to US$36 mn in FY2017. Not surprisingly, like its peers, LPC has had to bear the brunt of FDA delays to approvals for key products, resulting in loss of semi-exclusive window for Welchol suspension (1QCY15 launch, not delayed) and Renvela (pushed back to FY2017). Among other key launches expected in FY2016/17, we expect Namenda (2QFY16), Prevacid ODT (2HFY16), Ortho Tri-Lo (4QFY16), Generess Fe (4QFY16) and Detrol LA (4QFY16) as key launches in FY2016. Reiterate BUY with revised target price of `1,700 We expect further progress in several key technology areas such as topicals, nasals and particularly, pMDIs and DPIs in FY2016/17, as we expect Lupin to address bulk of nasals opportunity, at least 10 topical filings and 1 pMDI and DPI over the next 12-24 months, including generic Advair. Our tweaks to limited competition products lead us to upgrade our FY2016/17 EPS estimates by 2.7% and 5.5% respectively. At 20.7X FY2017 P/E, while the stock looks seemingly expensive, we see a scope for surprises from the US generics pipeline. Reiterate BUY rating with a revised target price of `1,700 (up from `1,600 earlier).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04022015rq.pdf
Low on revenues, high on margins. Lupin’s 3QFY15 results were mixed as revenues missed estimates on the back of a second straight miss for US generics division as Cymbalta and Niaspan price erosion impacted base comparison and offset Celebrex launch. Despite the decline in these high-margin opportunities, gross and EBITDA margins surprised positively with +150 bps qoq swing. We see the decline in US sales as a temporary blip and expect continued momentum on the back of US launches over FY2016/17E. Reiterate BUY rating with revised TP of `1,700 (`1,600 earlier).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Miss on revenues driven by Cymbalta and Niaspan 3QFY15 marked a period of two successive quarters of US miss, which is a rarity for LPC. The miss in the US was largely driven by continued competitive pressures from Cymbalta and Niaspan, and lack of new launches in the quarter. On our estimates, given Celebrex contribution in 3QFY15, Lupin’s base business would have contracted by US$20 mn qoq despite the onset of peak season for its cephalosporins portfolio in 2H. Ex-US, Lupin saw weak growth across divisions, driven by cross-currency impact with South Africa (9% INR versus 19% ZAR), Japan (-8% INR versus 4% JPY) along with India and Europe performing strongly at 14% yoy and 22% yoy respectively. Despite the US miss, EBITDA margins at 27.8% (+160 bps qoq) surprised positively, led by gross margins (67.8%; +150 bps qoq) and lower R&D spend. Nexium launch on the cards; could meaningfully add to growth According to Lupin management, they have responded to the FDA on all queries and are awaiting the final approval. Even as management is hopeful of a launch in 4QFY15, we build Nexium launch from 1QFY16. Given the evolving competitive dynamics, we expect Nexium to now contribute US$60 mn in FY2016 (versus US$30 mn earlier), declining to US$36 mn in FY2017. Not surprisingly, like its peers, LPC has had to bear the brunt of FDA delays to approvals for key products, resulting in loss of semi-exclusive window for Welchol suspension (1QCY15 launch, not delayed) and Renvela (pushed back to FY2017). Among other key launches expected in FY2016/17, we expect Namenda (2QFY16), Prevacid ODT (2HFY16), Ortho Tri-Lo (4QFY16), Generess Fe (4QFY16) and Detrol LA (4QFY16) as key launches in FY2016. Reiterate BUY with revised target price of `1,700 We expect further progress in several key technology areas such as topicals, nasals and particularly, pMDIs and DPIs in FY2016/17, as we expect Lupin to address bulk of nasals opportunity, at least 10 topical filings and 1 pMDI and DPI over the next 12-24 months, including generic Advair. Our tweaks to limited competition products lead us to upgrade our FY2016/17 EPS estimates by 2.7% and 5.5% respectively. At 20.7X FY2017 P/E, while the stock looks seemingly expensive, we see a scope for surprises from the US generics pipeline. Reiterate BUY rating with a revised target price of `1,700 (up from `1,600 earlier).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04022015rq.pdf
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