Morgan Stanley initiates coverage on Dr. Reddy's stock with Equalweight rating
Investing.com
Published Jul 14, 2025 01:41AM ET
Investing.com - Morgan Stanley initiated coverage on Dr. Reddy's Laboratories Ltd. (NYSE:RDY) with an Equalweight rating and a price target of INR1,298.00 on Monday.
The research firm cited a balanced outlook for the Indian pharmaceutical company, noting both positives and concerns in its assessment. Morgan Stanley expressed caution due to uncertainty around key product launches like Semaglutide and the slow scaling of biosimilars.
The firm acknowledged Dr. Reddy's long-term potential through biosimilars, differentiated generics, and contract development and manufacturing operations (CDMO). It warned that the expiration of generic Revlimid could put pressure on the share price in the near term.
Morgan Stanley noted that Dr. Reddy's strategy is shifting from complex generics to biosimilars (Bevacizumab, Rituxzumab) and GLP-1 (Semaglutide) for future growth. The company is also building a strong presence in over-the-counter brands across India and Russia, with its Nestle (NSE:NEST) joint venture now operational in India.
The price target of INR1,298 is based on a valuation of 20x FY27E P/E, in line with the company's past 10-year average of 21x. Morgan Stanley expects earnings to moderate in fiscal year 2026 due to the high generic Revlimid base in fiscal year 2025, before recovering in fiscal year 2028.
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Written By: Investing.com
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