14 Jan , 2025 By : Debdeep Gupta
Shares of Biocon surged over 4 percent on January 14 after brokerage firm HSBC upgraded the stock to a 'buy' call amid expectations of a turnaround for the drugmaker. HSBC also lifted its price target for the stock by nearly half to Rs 430 to factor in its growth potential.
At 10.16 am, shares of Biocon were trading at Rs 375.30 on the NSE, extending gains to the second session.
After the clearance of regulatory bottlenecks for Biocon, HSBC believes that the company is set for an operational turnaround. The rebound for Biocon is also expected to be led by key biosimilar launches and a recovery in generics sales.
Aside from that, HSBC also sees multiple triggers for Biocon to support its earnings growth ahead, especially since the US FDA clearance of the Malaysia plant removed a major overhang.
The US FDA's classification of Biocon’s Malaysia facility as "Voluntary Action Indicated" (VAI) over the weekend marked a sharp turnaround from the "Official Action Indicated" (OAI) status that it issued in October 2023. The facility had also faced five observations during a September 2023 inspection.
This regulatory clearance paves the way for Biocon to file for approval and launch its insulin biosimilar, Aspart, manufactured at the Malaysia unit. HSBC identified the launch of Aspart as a critical catalyst for Biocon's growth.
Following the development, brokerage firm Bank of America Securities also raised its price target for Biocon by nearly 9 percent to Rs 435, retaining its 'buy' call on the stock. The brokerage stated that the clearance of Biocon's major manufacturing sites in Bengaluru and Malaysia lifts confidence in the upcoming biosimilar launch pipeline.
Meanwhile, Bank of America Securities also pegged an increase in annualized revenue from $1 billion in the first half of FY25 to $1.2 billion in FY26. Looking ahead, the brokerage feels that the focus will now shift towards deleveraging and new launch performances for Biocon.
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