- Date : 09/03/2023
- Read: 3 mins
Reasons why Cipla shares fell 15% in a month
The share prices of leading pharmaceutical company Cipla have been declining consistently over the past month. It fell by about 15% in a month which is a cause of concern for many investors. Moreover, over the last year, Cipla’s shares did not deliver good returns as they declined by 6.5%.
As investors worry about falling share prices, analysts have put together reasons which might be causing the fall. Here’s why, according to analysts, Cipla share prices are declining –
- The international effect
Many pharmaceutical companies export their medicines to international markets, especially the US. However, the USA has a strong regulatory policy, and this policy has affected Cipla. Recently, the US regulator investigated Cipla’s Pithampur plant and reported eight negative observations. The Pithampur plant contributes 5% of Cipla’s total revenue and has a share of 15% in the company’s operating profits. A negative review of the plant has caused a negative reaction among investors, causing a decline in share prices.
- Delay in new launch
After the US regulator’s negative review, the company is facing an unexpected delay in the launch of new drugs, especially gAbraxane, which is meant for cancer. Delays and an unfavourable report have disrupted the company’s operations which might have caused the disruption in the share prices too.
- Unimpressive financial results
Cipla published its financial results for the third quarter of the financial year 2022-23, and the results were below analyst estimates. After the October-November-December 2022 quarter, the net profit was reported at Rs.801 crores after posting an annual increase of 10%. The revenue also rose only 6% annually to Rs.5810. analysts expected the net profits and revenue to amount to Rs.880 crores and Rs.6100 crores, respectively.
A muted performance has also adversely affected the share prices.
What do analysts say?
Amidst the declining share prices, here’s what analysts and experts have to say about Cipla’s scrip –
- Some experts have maintained a ‘Neutral’ rating with a target price of Rs.990 per share.
- Some have rated the stock ‘Buy’ with a target price of Rs.1070
Related - Read about the things that you should keep in mind when investing in pharma stocks
What should you do?
As share prices are not favourable for trading, you can hold onto your investments and wait for the prices to bounce back. Keep track of the company’s performance as experts believe that the company has a stable financial outlook and might deliver returns in the future.
Related - Check out some of the best pharma mutual funds to invest in
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
The share prices of leading pharmaceutical company Cipla have been declining consistently over the past month. It fell by about 15% in a month which is a cause of concern for many investors. Moreover, over the last year, Cipla’s shares did not deliver good returns as they declined by 6.5%.
As investors worry about falling share prices, analysts have put together reasons which might be causing the fall. Here’s why, according to analysts, Cipla share prices are declining –
- The international effect
Many pharmaceutical companies export their medicines to international markets, especially the US. However, the USA has a strong regulatory policy, and this policy has affected Cipla. Recently, the US regulator investigated Cipla’s Pithampur plant and reported eight negative observations. The Pithampur plant contributes 5% of Cipla’s total revenue and has a share of 15% in the company’s operating profits. A negative review of the plant has caused a negative reaction among investors, causing a decline in share prices.
- Delay in new launch
After the US regulator’s negative review, the company is facing an unexpected delay in the launch of new drugs, especially gAbraxane, which is meant for cancer. Delays and an unfavourable report have disrupted the company’s operations which might have caused the disruption in the share prices too.
- Unimpressive financial results
Cipla published its financial results for the third quarter of the financial year 2022-23, and the results were below analyst estimates. After the October-November-December 2022 quarter, the net profit was reported at Rs.801 crores after posting an annual increase of 10%. The revenue also rose only 6% annually to Rs.5810. analysts expected the net profits and revenue to amount to Rs.880 crores and Rs.6100 crores, respectively.
A muted performance has also adversely affected the share prices.
What do analysts say?
Amidst the declining share prices, here’s what analysts and experts have to say about Cipla’s scrip –
- Some experts have maintained a ‘Neutral’ rating with a target price of Rs.990 per share.
- Some have rated the stock ‘Buy’ with a target price of Rs.1070
Related - Read about the things that you should keep in mind when investing in pharma stocks
What should you do?
As share prices are not favourable for trading, you can hold onto your investments and wait for the prices to bounce back. Keep track of the company’s performance as experts believe that the company has a stable financial outlook and might deliver returns in the future.
Related - Check out some of the best pharma mutual funds to invest in
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
