On Friday, Incred Research adjusted its outlook for Sun Pharmaceutical Industries Ltd. (SUNP:IN) shares, raising the price target to INR1,756.00 from the previous INR1,665.00. The firm maintained a Hold rating on the stock.
This adjustment follows Sun Pharma's first-quarter performance for the fiscal year 2025, which presented a varied picture of the company's operations.
The pharmaceutical giant reported a robust performance in its Indian market, with a year-over-year increase of 16%. However, the US business did not meet expectations, generating revenue of $466 million compared to the anticipated $481 million. The global specialty sales were slightly down by 2% quarter-over-quarter, totaling $266 million, influenced by the seasonal nature of Levulan sales.
Sun Pharma's EBITDA exceeded Incred Research's and consensus estimates by 7%, partially due to a decrease in research and development (R&D) expenses, which fell by 120 basis points quarter-over-quarter.
The company has provided guidance for R&D spending to be between 8-10% of sales for the fiscal year 2025, suggesting a significant increase in the future.
Despite the positive EBITDA, the gross margin declined by 120 basis points quarter-over-quarter, which was partly attributed to the lower specialty revenue.
The performance in India was notably strong, with a 16% growth year-over-year. Emerging markets also showed a healthy expansion, with a 9% year-over-year increase.
The less than expected results in the US were primarily due to lower specialty sales and possibly reduced revenue from gRevlimid, as the management indicated no major contributions from this product during the quarter. Nevertheless, these setbacks were partially offset by market share gains in gPentasa and gCiprodex.
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