UBS picks 2 pharma stocks that are likely to give 23-26% returns

Brokerage UBS prefers Sun Pharma and Cipla among Indian drugmakers and expects the stocks to return 26% and 23%, respectively, over Friday’s closing.

Ascribing sell ratings to Lupin, Dr Reddy’s Laboratories, Zydus Lifesciences and Aurobindo Pharma, the brokerage said the US generic market has been declining and the pace could worsen.

“In India also, the growth of India pharma market has been slowing and recent trends of sharp increase in unbranded generics is a concern,” said UBS analysts in a client note. “These two markets account for 70-80% of sector profits and would imply lower growth.”