HSBC says Odomzo deal to strengthen Sun Pharma's specialty business focus

MUMBAI: Sun Pharmaceutical Industries’ decision to acquire branded oncology product Odomzo from Novartis for $175 million will strengthen the drug maker’s specialty business focus, said HSBC in a report.

The brokerage has maintained a ‘buy’ rating on the stock with a target price of Rs 797. The target price implies an upside of 27.8% from current levels. On Friday, the stock ended up 2.4% at Rs 623.80.

However, resolution of the US FDA issues at its Halol facility will remain an overhang.

“While the specialty is a long-term trigger, further near-term upside is capped until clarity emerges on Halol. There could be downside risk if there are material delays in Halol clearance, but FY18/19e PE of 17.2/15.3x (vs 19.7/16.9x for the sector) is attractive and with Sun’s strong long-term US outlook, we maintain our Buy rating,” said HSBC.