BofA/Merrill Lynch Downgrades Dr. Reddy's Laboratories (RDY) to Underperform

BofA/Merrill Lynch downgraded Dr. Reddy's Laboratories (NYSE: RDY) from Neutral to Underperform and cut their price target to $42.50 citing poor execution at the operational level.

Analyst Manoj Garg notes Dr Reddy’s (DRRD) 4Q PAT at Rs4.8bn (up 4% YoY) was -19% below the firm's estimate due to lower-than-expected EBITDA margins (21.8% vs 26.7% estimate).

They cut FY15/16E EPS by -8%/-7% to factor a) higher R&D cost, b) moderate US revenue (9% growth) and c) lower contribution from Russia/CIS. Due to moderation in core earnings (13% CAGR) and limited upside, they downgrade to Underperform.

For an analyst ratings summary and ratings history on Dr. Reddy's Laboratories click here. For more ratings news on Dr. Reddy's Laboratories click here.

Shares of Dr. Reddy's Laboratories closed at $43.82 yesterday.

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