Pharma Stocks Outlook for the week – 31.07.2017 to 04.08.2017

Pharma Stocks Outlook for the week – 31.07.2017 to 04.08.2017

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Pharma Stocks Outlook for the week – 31.07.2017 to 04.08.2017 )

Earnings of pharmaceutical companies will be the key trigger for their stocks next week and most investors are cautious on that front for now. While domestic institutional investors are buying stocks, they are being extremely selective right now. We are getting orders for Aurobindo (Pharma) and Cadila (Healthcare) but they are staying away from Dr Reddy's for now. Movement in the sector next week is likely to remain stock-specific, with investors seen avoiding certain stocks like Dr Reddy's Laboratories. While shares of Dr Reddy's may stabilise around current levels after an 11% slump this week, gains are unlikely to be more than 2-3%. Yesterday, stocks of the Hyderabad-based company slumped 6% after the company reported dismal earnings for the June quarter and gave a weak outlook for its US sales. The company's consolidated net profit more than halved on year to 666 mln rupees in the reporting quarter, primarily due to a fall in domestic sales and price erosion of some of its key products in the US market. While management has underlined a strategy to bring things back on track, we believe the results would only be visible in FY19 and hinge on critical US launches
with uncertain timelines. Continued disappointment and lack of triggers in the near term may test investor patience. Next week, Lupin and Wockhardt as scheduled to detail their earnings for the quarter ended June. On Wednesday, Lupin is expected to report a 46% on-year slump in its consolidated net profit to 4.75 bln rupees. The stock may consolidate around current levels. Lupin, though, may get a boost on Monday after the US Food and Drug Administration cleared the company's facility at Pithampur in Madhya Pradesh in a prior approval inspection.

Source : Cogencis Information Services Ltd.