Updated: Nov 17, 2019
[Current Market Price of Sun Pharma: 383.20 Rs.]
First of all, let us examine why Sun Pharma is falling?
1. On Jun 21, 2019, Sun Pharma gets 4 observations from USFDA for its Halol facility which accounts for its 35–40% of total revenue.
2. Goldman Sachs downgraded shares of Sun Pharmaceutical Industries to ‘sell’ from ‘neutral’ and cut the target price to Rs 355 from Rs 437 as it believes that spending in specialty pharma will impact the company’s profit growth in the future.
3. Sun Pharma Q4 consolidated net profit halves to ₹636 crore.
Now Some important insights from which you aren’t aware:
First of all, very less investors understand the process of USDFA observations and form 483. Let me clarify.
Q: What is the purpose of an FDA Form 483?
A: The FDA Form 483 notifies the company’s management of objectionable conditions. At the conclusion of an inspection, FDA Form 483 is presented and discussed with the company’s senior management. Companies are encouraged to respond to the FDA Form 483 in writing with their corrective action plan and then implement that corrective action plan expeditiously.
So, Companies are responsible to take corrective action to address the cited objectionable conditions and any related non-cited objectionable conditions that might exist.
Sun Pharma Said, The company will submit its response to the observations to the USFDA within 15 business days.
2. Goldman Sachs, of course, downgraded shares of Sun Pharmaceutical Industries to ‘sell’ from ‘neutral’ and cut the target price to Rs 355 from Rs 437 but Let me publish show you some other reputed brokerage reports.
(All reports are latest):
. Brokerage: Morgan Stanley | Rating: Underweight | Target: Rs 470 | Return: 14%.
. Brokerage: Credit Suisse | Rating: Neutral | Target: Rs 470 | Return: 14 %
. Brokerage: Citi | Rating: Buy | Target: Rs 540 | Return: 31%.
. Brokerage: UBS | Rating: Buy | Target: Rs 500 | Return: 21%
. Brokerage: CLSA | Rating: Buy | Target: Rs 520 | Return: 26%
. Brokerage: Jefferies | Rating: Buy | Target: Rs 520 | Return: 26%
. Brokerage: Nomura | Rating: Buy | Target: Rs 536 | Return: 30%
. Buy Sun Pharma; target of Rs 600: HDFC Securities
. Hold Sun Pharmaceutical Industries; target of Rs 460: Sharekhan
. Hold Sun Pharmaceutical Industries; target of Rs 460: ICICI Direct
I don’t know why investors aren’t talking about it.
3. Yes, Sun Pharma Q4 consolidated net profit halves to ₹636 crore.
However, the consolidated total revenue from operations rose 5% to ₹7,044 crore and Company’s board recommends a dividend of ₹2.75 per share.
One thing I observed from my experience, whenever big company’s stock price plunges and there is all negative news all around, Retail investors feel panic and sell & Institutional investors start buying it at a cheaper price. After some days, the stock price goes up. I am confused if it is happening again this time.
Not just Sun Pharma but big company’s like Glenmark is also trading at their 6-year low price.
Technical Analysis: 350 is the major Support level for Sun Pharma so, it may bounce back from these levels.
Investors can buy Sun Pharma for Mid to Long Term.
Akshay Seth email@example.com | Linkedin
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