Dr Reddy’s shares fall 2% after Goldman Sachs downgrades, Citi turns cautious
Goldman Sachs turns cautious, trims outlook sharply
The brokerage downgraded the inventory to “Promote” and sharply lower its goal value to Rs 1,075 from Rs 1,225, signalling potential draw back from present ranges.
A key overhang is the much-anticipated alternative linked to Ozempic, which Goldman Sachs now believes might be smaller in scale and shorter-lived than beforehand anticipated. This has raised questions concerning the firm’s near-term development triggers.
Including to the stress, the agency highlighted restricted visibility in Dr Reddy’s pipeline, noting a scarcity of great high-value launches that would drive earnings momentum. In the meantime, ongoing value erosion in its core generics enterprise continues to dent profitability.
Reflecting these challenges, Goldman Sachs has lower earnings per share (EPS) estimates by 8-26% for FY26-FY28, indicating a weaker earnings trajectory forward.
The brokerage additionally flagged valuation issues, arguing that the inventory’s present multiples are forward of underlying fundamentals. It now values Dr Reddy’s at round 19x P/E, warning of additional draw back danger if development fails to materialise.
Citi stays bearish regardless of approval optimism
Citigroup additionally maintained its “Promote” score on the inventory with a goal value of Rs 1,070, reinforcing a cautious consensus amongst world brokerages.
Whereas Dr Reddy’s shares had earlier gained almost 9% on stories of an unverified generic semaglutide approval in Canada, Citi downplayed the thrill, arguing that even when confirmed, the upside seems overstated given intense competitors.
The brokerage estimates FY28 product revenues of round $50 million in a six-player market, whereas revising FY27 income expectations to $80-100 million (up from ~$60 million earlier) in a three-player aggressive set together with Dr Reddy’s, Sandoz and Apotex.
Citi additionally expects fourth-quarter FY26 earnings to normalise on a base excluding Revlimid contributions and warned that broader market earnings estimates might have to be revised downward. Its EPS forecasts are already 20%-23% beneath consensus, underscoring a extra conservative stance on earnings development.
Sentiment turns cautious
With each Goldman Sachs and Citi flagging restricted earnings visibility, pipeline uncertainty and stretched valuations, sentiment round Dr Reddy’s has turned notably cautious, regardless of intermittent optimism round area of interest product approvals.
(Disclaimer: The suggestions, options, views and opinions given by the specialists are their very own. These don’t symbolize the views of The Financial Instances.)
