1 NATCOPHARM share price target reports by brokerages below. See what is analyst's view on NATCOPHARM share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
At current CMP of Rs 601, NATCO is trading at a P/E of 17x on FY22E EPS. Despite weak performance so far this year on account of better flu season in the U.S and pricing pressure, we expect a turnaround to take place from FY21E onwards assuming the Revlimid trail goes favourably for NATCO, while new launches in the emerging markets should drive earnings. However, if the coronavirus situation further worsens, it may lead to supply constraints of raw materials. Therefore we retain a SELL rating based on 15x FY22E EPS.
We revise our estimates on NPL as we lower Export Formulation forecasts and also calibrate our domestic growth expectations on account of the recent launches in the domestic market in the C&D space, which are expected to witness higher competition. Based on our revised estimates we lower our target price to Rs685 (from Rs747) and recommend an Accumulate rating on the stock. The target price is based on sum of the parts valuation methodology, which values the base business at 15x September FY21E earnings and the Revlimid opportunity on a risk adjusted basis at Rs210 per share.
We estimate these opportunities can translate to Rs2000mn to Rs4000mn in sales for NPL over the next 3 years. In Brazil too, NPL is anticipating new approvals in the coming months which should allow it to double current run rate from Rs300mn per quarter. We have retained Buy rating on the stock with a target price (TP) of Rs654, up 19% from the CMP.
With niche product launches, Natco’s India, Brazil and Canada businesses would do well, we believe. However, its revenue, EBITDA and PAT are likely to be flat over FY19-21 due to the high base for gTamiflu, though to some extent likely to be counter-balanced by gCopaxone. Beyond FY21, however, we expect a few niche launches to drive earnings. We retain a Buy on the stock, with a target of Rs 763.
At current CMP of Rs516, NATCO is trading at a P/E of 13x on FY21E EPS. We believe that increasing copaxone market share and better results from EM’s will sustain the earnings growth going forward. We project domestic/ export formulations to grow at ~7/6% CAGR over FY19-21E and expect margins to stabilize around 39% in FY21E. However, considering no major launches in FY20, we value at 12x on FY21E EPS and downgrade the rating to sell from hold with a revised target price of Rs487.
Based on the revised forecasts, we have cut our target price on NPL to Rs654 (from Rs779 earlier) and retained Buy rating on the stock. NPL has given guidance of high single-digit growth in net earnings for FY20, which is expected to be largely driven by rest of world markets (Canada and Brazil) and India. These markets put together should post high-teen growth. As regards limited competition portfolio in the US, the company does not assume incremental competition in Copaxone generic, at least until the end of CY20.
The bright spot for Natco is of course its strong balance sheet besides the management’s abilityto carve out niche out of the available opportunities. The growth trajectory is likely to improve from FY22 onwards as the new strategy settles down. We value the stock on an SOTP basis. Accordingly, we arrive at our new target price of | 595, which includes base business value of ~| 400 (15x FY21E EPS of | 26.7) + | 195 for NPV of FTF/Para IVs in the US.
Based on our updated forecasts, we have arrive at a target price of Rs776 for NPL based on 20x September FY21E earnings. We have upgraded our rating on NPL to Buy (from Accumulate earlier) as the revised target price represents a 22% upside over the CMP. NPL’s growth strategy remains focused around limited-competition products, but it is now looking at markets beyond the US. Canada, Brazil and India are the other focus markets and lately the company has decided to enter China as new regulations there have lowered the entry barriers. Successful entry in China can be highly meaningful as new product launches can potentially be as lucrative as the US market. In Canada, the focus is to launch the oncology product portfolio. In addition, the company is also investing in the agrochemical space and has identified a basket of niche difficult-to-make products (limited-competition) that would give it a competitive advantage.
At current CMP of Rs594, NATCO is trading at a P/E of 13x on FY21E EPS. We believe that increasing copaxone market share and better results from EM’s will sustain the earnings growth going forward. We project export formulations to grow at ~17% CAGR over FY19-21E and expect margins to stabilize around 40% in FY21E. We therefore value Natco at 14x on FY20E EPS and downgrade our rating to Hold from ‘Buy’ with a target price of Rs 640.
As expected, Q3 numbers were impacted due to high base of Oseltamivir. However, progress in gCopaxone is promising (Glatiramer Acetate; market share 25-30%). The management has reiterated its commitment towards niche opportunities with limited competition. However, given the current trend in the US, wherein the niche opportunities being specifically targeted by the USFDA to encourage more generic players, this funnel is getting squeezed. In this backdrop, the management has further curtailed US scope. At the same time, it is looking at other geographies and businesses (Agrochem). As per the new strategy, specific markets- India, Brazil, Canada and China and agrochemical segment, together are likely to contribute 70-80% of revenues in the next two to three years. This metamorphic shift is likely to witness some performance slowdown and fluctuation in the near term. Also, due to steep competition and uncertainty in the US, we reduce Revlimid NPV. We value the stock on an SOTP basis. Accordingly, we arrive at our new target price of | 635, which includes base business value of ~Rs 440 (25x FY21E EPS of Rs 17.7) + ~Rs 195 for NPV of FTF/Para IVs in the US.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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