Biocon rallies nearly 7% as Morgan Stanley upgrades stock to ‘overweight’

By Sanam Mirchandani

MUMBAI: Shares of Biocon rallied 6.6% to Rs 523.60 as Morgan Stanley has upgraded the stock to ‘overweight’ from ‘underweight’ and raised target price to Rs 622 from Rs 459 stating that its four potential product filings each in the US and EU will add credibility to its pipeline.

“2016 could be a turning point for BIOS...we see BIOS as a strong re-rating story given that markets have hardly priced in its biosimilar pipeline,” Morgan Stanley said in a report today.

The four lead compounds of Biocon are glargine, trastuzumab, pegfilgrastim, and adalimumab.

“By 2020, we estimate US$244mn revenues (BIOS's share), which, at 30% margins,implies a doubling of current profits,” Morgan Stanley said.

The company’s follow-on pipeline of another five products in early stages, are also providing growth visibility over the long term, the brokerage said.

Key risks for Biocon going ahead include delay in launch of four key biosimilars in US or EU due to regulatory or legal challenges, as well as higher-than-expected competition in developed and emerging markets.