Bank of America Securities lowered its target price on Sun Pharma to Rs 1,570 from Rs 1,730, stating it expects consensus earnings and valuations to face pressure. “While we could continue to see the company pursuing more speciality M&A, this optionality is priced in with downside risk from disappointment in scale-up of its recently acquired (and launched) speciality assets,” the brokerage said.
The research house flagged that the company’s market-friendly new launches, particularly speciality drugs, have yet to fully reflect in earnings despite optimism around its psoriasis treatment, Ilumya.
Speciality execution key
BofA said that while Ilumya has exceeded initial expectations, consensus estimates remain ahead of realistic reimbursement challenges and competitive landscapes for other speciality products.
The brokerage noted that nearly 75% of Ilumya’s revenue comes from Medicare Part B drugs, making Sun Pharma’s earnings particularly vulnerable to pricing pressures from MFN inclusion. A 10% price reduction, it said, could dent the company’s earnings per share (EPS) by 4%.
Valuation concerns
The brokerage noted that Sun Pharma trades at a forward price-to-earnings multiple of 25.5 times versus its 10-year average of 25.5 times. “We see risk to consensus earnings and premium valuations,” it said.Sun Pharma shares have fallen over 14% so far in 2025 and are down nearly 9% over the past 12 months. The stock has also declined close to 5% in the last month.From a technical standpoint, the stock is currently trading below eight of its eight key simple moving averages (SMAs), including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day SMAs, indicating bearish undertones in the short-term to long-term charts.
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The Relative Strength Index (RSI) stands at 52.2, suggesting the stock is neither overbought nor oversold. Meanwhile, the Moving Average Convergence Divergence (MACD) is at -9.4 and remains below the centre line, reinforcing the ongoing bearish trend.
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