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Glenmark Pharma share falls 6% on price-fixing allegations in US, here's what brokerages say

Glenmark Pharma stock trades higher than 20, 50, 100 and 200-day but lower than 5-day moving averages. The stock has fallen 6.5% in one week

Rupa Burman Roy | July 1, 2020 | Updated 12:52 IST
Glenmark Pharma share falls 6% on price-fixing allegations in US, here's what brokerages sayGlenmark Pharma share falls 6% on price-fixing allegations in US, here's what brokerages say
Glenmark Pharma stock has risen 16% in one month and 23% year-to-date

Glenmark Pharma share price slipped nearly 6% intraday in Wednesday's early session after the US Justice Department announced that Glenmark Pharmaceuticals USA was charged for conspiring to fix prices for generic drugs. The charge was filed in US District Court in Philadelphia.

Glenmark Pharma shares touched an intraday low of Rs 424, falling 5.82% against the last closing of Rs 450.20. The pharma stock today opened at Rs 446.90 and touched intraday high of Rs 448.95. However, it erased early gains to trade in the red.

Glenmark Pharma stock trades higher than 20, 50, 100 and 200-day but lower than 5-day moving averages. The stock has fallen 6.5% in one week.

However, Glenmark Pharma stock has risen 16% in one month and 23% year-to-date. The recent jump in the stock price of the firm was on the back of receiving Indian regulatory approval to make and sell oral antiviral drug Favipiravir for treating mild-to-moderate COVID-19 patients. On the day of announcement on Favipiravir approval, the stock rose 35% intraday.

As per a Reuters report, the US Justice Department said in a statement the pharma major based in the USA allegedly conspired with pharmaceutical maker Apotex Corp and other generic drug companies to increase the prices of cholesterol medication pravastatin and other generic drugs. This took place from 2013 to 2015.

Responding to reports, the company said, "We will continue to vigorously defend against these allegations that we know to be false, and we are confident the overwhelming evidence will make that clear." Glenmark has strongly disagreed with the charge.

After its fourth-quarter results, brokerages have a mixed view on the share.

Post Q4FY20 results, Motilal Oswal in its report said it expects a 14% earnings CAGR over FY20-22, led by a sales CAGR of 11%/10% for India/Europe, better prospects for the US business, and improved profitability. The brokerage house maintained 'Neutral' rating on the stock.

Emkay in its recent report retained 'Buy' rating for the pharma stock with a revised target price of Rs 526, given the recent Faripiravir approval. Emkay also said that clarity on debt reduction is the key trigger which remains key to the stock's re-rating.

BofA Securities increased Glenmark's target price to Rs 535 and added that company's debt reduction, divestment of non-core assets, control in expenses, CAPEX and lower R&D expenses will drive further re-rating of the stock.

CLSA broking house cut its FY22 EPS estimate by 4% for the pharma major and revised its target price to Rs 420 from Rs 440 per share after March-quarter earnings. CLSA cited flat earnings outlook for FY21 and limited scope for debt reduction.

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