Sun Pharma Shares Fall 3% After BofA Downgrade Citing Risks to Premium Valuations and Slower Execution of Speciality Drugs

Sun Pharma shares fell 2.8% to Rs 1,610 on BSE after Bank of America Securities downgraded the stock to "underperform" due to risks to premium valuations and slower-than-expected execution in speciality drugs. The brokerage reduced its target price to Rs 1,570 from Rs 1,730, citing pressure on consensus earnings and valuations.

Indian markets opened lower on Tuesday, with the Nifty50 index failing to hold the crucial 24,900 in early trade. The Nifty Pharma index was the biggest drag on broader markets, sliding 1.35% [1]. At 10 a.m. IST, the Nifty 50 traded 172 points lower at 24,795.9, while the Sensex was down 574.3 points at 81,061.6 [1].

Sun Pharmaceutical Industries Ltd (Sun Pharma) shares fell 2.8% to Rs 1,610 on BSE after Bank of America Securities downgraded the stock to "underperform" due to risks to premium valuations and slower-than-expected execution in specialty drugs [2]. The brokerage reduced its target price to Rs 1,570 from Rs 1,730, citing pressure on consensus earnings and valuations [2].

The downgrade comes as Sun Pharma faces challenges in its specialty drugs segment, which has seen slower-than-expected execution. The company's specialty drugs division has been a key growth driver, but recent delays and setbacks have raised concerns among investors and analysts.

Sun Pharma's shares have been under pressure in recent weeks, with the stock trading below its 200-day moving average. The downgrade by Bank of America Securities is likely to exacerbate this trend, as investors may become more risk-averse towards the stock.

Analysts are closely watching the performance of Sun Pharma's specialty drugs division, as it is a critical factor in the company's overall growth prospects. The company has been investing heavily in research and development, but the execution of these projects has been slower than expected.

In the broader market, the Nifty 50 index faced resistance exactly at the 61.8% retracement level of 25,153, measured from the recent decline between 25,669 and 24,363 last week, said SEBI-registered analyst Kush Ghodasara [1]. If the index breaks below 24,850, it would signal confirmation of further downside momentum, he added.

References:
[1] https://stocktwits.com/news-articles/markets/equity/india-stock-market-nifty-slips-under-24-900-as-pharma-stocks-lead-the-drag/chsHjkURdSn
[2] https://www.biopharmadive.com/news/royalty-beone-imdelltra-rights-drug-sales/758501/