Zydus Life shares: Systematix upgrades stock to 'Buy', sees 18% upside; check target price

Brokerage firm Systematix Institutional Equities has upgraded its rating on Zydus Lifesciences to ‘Buy’, citing a major boost to the company’s rare disease portfolio following a key USFDA approval. 

The brokerage sees the recent regulatory nod as a pivotal development that could help turn the company’s US-based subsidiary, Sentynl Therapeutics, profitable within the next few years.

The optimism stems from Sentynl Therapeutics receiving USFDA approval for its Menkes disease drug candidate, Copper Histidinate, which will be marketed under the brand name Zycubo. Systematix noted that Zycubo is not just the third asset in Sentynl’s ultra-rare portfolio, but a significant expansion of its market reach, noting that it expands the addressable patient population five fold. 

Zycubo holds the distinction of being the first and only approved treatment for this condition, offering a lifeline for patients where median survival without treatment is typically less than 18 months, it said.

According to the brokerage, the financial implications of this approval are substantial. While Sentynl posted an EBITDA loss of USD 8 million in FY25 on sales of USD 23 million, the addition of Zycubo is expected to reverse this trend. Systematix projected that with Zycubo entering the mix, Sentynl could turn profitable by FY28. 

They estimate that the drug will generate commercial sales of USD 10-15 million in FY28E, eventually ramping up to a peak sales potential of USD 50mn by FY30. This projection assumes a net price realisation of USD 6 lakh per patient annually.

Systematix has raised its price target for Zydus Lifesciences to Rs 1,038, valuing the stock at 25x its FY27 EPS. With the stock on Monday traded at Rs 881, this target implies a potential upside of approximately 17.8%.