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What is the story about?
Several brokerages have downgraded shares of drugmaker Cipla Ltd
. following its December quarter results, with the stock falling in eight of the last nine trading sessions.
Jefferies downgraded the stock to 'Underperform' and cut its price target to ₹1,170 per share, implying a potential downside of about 12% from Friday's closing levels.
The brokerage said the Q3 performance missed expectations due to weak US sales, led by a quarter-on-quarter decline in gRevlimid and Lanreotide revenues.
Jefferies also flagged management's decision to cut FY26 EBITDA margin guidance by 175 to 300 basis points, citing supply disruptions in Lanreotide, which are expected to persist through the first half of FY27.
The brokerage expects top US products to witness a decline in FY27, with meaningful contributions from pipeline launches likely only from FY28 onwards. As a result, Jefferies cut its FY26 to FY28 earnings per share estimates by 19 to 21%.
HSBC also downgraded Cipla to 'Hold' and reduced its price target to ₹1,285.
The brokerage said weaker gRevlimid sales in the December quarter led to a sharp decline in profitability, prompting management to lower FY26 EBITDA margin guidance to 21% from the earlier range of 22.75 to 24%.
HSBC added that execution will remain critical for Cipla to navigate challenges such as the Lanreotide supply disruption and restore operational stability. The resolution of Lanreotide supply issues remains a key monitorable, the brokerage said.
Macquarie maintained an 'Outperform' rating on Cipla with a price target of ₹1,490, but acknowledged that the company's revenue, adjusted EBITDA and adjusted PAT missed its estimates by 6%, 26% and 23%, respectively.
The brokerage said that management has lowered its FY26 EBITDA margin guidance to 21% and also signalled a potential downgrade to FY27 US revenue guidance.
However, Macquarie believes the recent correction in the stock price already factors in most of the near-term headwinds.
Shares of Cipla Ltd. ended 3.51% lower last Friday during the market sell-off at ₹1,322.30. The stock is down 12% so far this year.
Jefferies downgraded the stock to 'Underperform' and cut its price target to ₹1,170 per share, implying a potential downside of about 12% from Friday's closing levels.
The brokerage said the Q3 performance missed expectations due to weak US sales, led by a quarter-on-quarter decline in gRevlimid and Lanreotide revenues.
Jefferies also flagged management's decision to cut FY26 EBITDA margin guidance by 175 to 300 basis points, citing supply disruptions in Lanreotide, which are expected to persist through the first half of FY27.
The brokerage expects top US products to witness a decline in FY27, with meaningful contributions from pipeline launches likely only from FY28 onwards. As a result, Jefferies cut its FY26 to FY28 earnings per share estimates by 19 to 21%.
HSBC also downgraded Cipla to 'Hold' and reduced its price target to ₹1,285.
The brokerage said weaker gRevlimid sales in the December quarter led to a sharp decline in profitability, prompting management to lower FY26 EBITDA margin guidance to 21% from the earlier range of 22.75 to 24%.
HSBC added that execution will remain critical for Cipla to navigate challenges such as the Lanreotide supply disruption and restore operational stability. The resolution of Lanreotide supply issues remains a key monitorable, the brokerage said.
Macquarie maintained an 'Outperform' rating on Cipla with a price target of ₹1,490, but acknowledged that the company's revenue, adjusted EBITDA and adjusted PAT missed its estimates by 6%, 26% and 23%, respectively.
The brokerage said that management has lowered its FY26 EBITDA margin guidance to 21% and also signalled a potential downgrade to FY27 US revenue guidance.
However, Macquarie believes the recent correction in the stock price already factors in most of the near-term headwinds.
Shares of Cipla Ltd. ended 3.51% lower last Friday during the market sell-off at ₹1,322.30. The stock is down 12% so far this year.
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