Cipla shares: Analysts are optimistic about Cipla after Revlimid patent liquidation; see almost 30% rally

According to the brokerage firm, the gRevlimid deal is positive for Cipla stock as the market failed to anticipate the potential upside of this opportunity sooner.

Cipla Ltd’s shares were reduced almost one percent to BSE today after the company announced the settlement of its litigation with Celgene Corporation, a wholly-owned subsidiary of Bristol Myers Squibb, related to patents for Revlimid (lenalidomid). Most research and brokerage houses are optimistic about Cipla stocks and see an upward trend of over 26 percent. According to a BSE filing, in order to resolve any outstanding claims in the litigation, Celgene has agreed to license Cipla to Celgene’s patents required to manufacture and sell certain limited-quantity quantities of generic lenalidomide in the United States on a confidential date that is some time after March 2022.

Also read: ‘Neutral’ at Cipla, well positioned to achieve a CAGR of 24%

The analysts from Edelweiss Research welcomed the agreement, as it made the sales for the 23/24 financial year visible. For Cipla, the brokerage company assumed a top market share of 10% in the volume-limited period. It has revised its price target from Rs 910 apiece to Rs 945, up nearly 20 percent from the previous close. It was recommended to buy Cipla shares.

According to JM Financial Services, the terms of the settlement offered to Cipla appear to be similar to those offered to Dr. Reddy’s and Alvogen were offered, whereby the agreed quantity restrictions remain confidential.

It was also recommended to “buy” the stock with a price target of Rs 1000 apiece. Cipla has to jump 26.7 percent from the previous closing price to meet the price target set by the broker. Now that Cipla gains a dominant market share in gProventil, growth in the US is expected to be driven by gains in market share from other albuterol inhalers, with Proventil’s share of the total albuterol market increasing to 10% and a favorable competitive environment creating Perrigo’s exit should be an important tailwind in the short term.

The BOB Capital Market is also bullish on Cipla stock with a target price of Rs 900, up 14 percent from the previous close. According to the brokerage firm, the gRevlimid deal is positive for Cipla stock as the market failed to anticipate the potential upside of this opportunity. “This will build confidence in Cipla’s capabilities and focus on maximizing value-added opportunities for complex generics,” he added.

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