Laurus Labs hits 52-week low as KIE downgrades stock to sell

Shares of pharmaceutical and biotechnology company Laurus Labs plunged nearly 8% to hit a 52-week low of Rs 415.25 in Tuesday’s intraday trade on BSE as Kotak Institutional Equities (KIE) downgraded the stock to sell.

Citing that Laurus Labs has witnessed severe pricing pressure and lower volumes in its ARV formulations portfolio for five quarters now, resulting in significant pressure on core margins, the research firm Kotak Institutional Equities downgraded Laurus to sell with a target price of Rs 350, which shows a downside potential of 17% from the current market price of Rs 418.

“We believe Laurus’ troubles on ARV pricing and looming cessation of Paxlovid sales are being underappreciated. Ex-Paxlovid, it reported just about 19% EBITDA margin in 1HFY23. Even as volumes pick up, Laurus’ ARV realization will stay under pressure as it bids for winner-takes-all tenders and lower long-term tender prices. As Paxlovid sales recede, the true extent of the margin hit will unravel,” Kotak Institutional Equities said.

However, as per Trendlyne data, the highest target for stock goes up to Rs 735, while the average estimate of Rs 561, shows an upside of the potential of around 32.5% from the current prices.

Out of the 11 analysts covering the stock, seven have strong buy and buy ratings while three have strong sell and sell ratings and one has a hold rating.

At 11.37 am, the scrip was trading 7.15% lower at Rs 418.3 against its previous day’s closing price of Rs 450.5 per share. The stock has fallen over 25% in the last six months, while it has lost nearly 21% year-to-date.

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