Reasons to Invest in Dr. Reddy's (RDY) Amid Coronavirus Woes
Though the current economic scenario has made people wary of investing in stock markets, a few reasons suggest that it is a wise idea to buy Dr. Reddy's Laboratories Limited RDY stock now.
Good Rank and Rising Estimates: The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dr. Reddy's earnings estimates have risen almost 4.9% for 2020 and 2.8% for 2021 over the past 60 days. The company’s shares have surged 47.1% year to date against the industry’s decline of 9.9% in the same time frame.
Strong Generic Pipeline: Dr. Reddy’s enjoys a strong position in the generics market. As of Jun 30, 2020, the company had 101 generic filings (99 abbreviated New Drug Applications [ANDAs] and two new drug applications) pending FDA approval. Of these 99 ANDAs, 54 were Para IV filings and 28 had first-to-file status. Product launches, especially complex generics, should help it drive the generics business at regular intervals. In the first quarter of fiscal 2020, the company launched six products in North America, namely fenofibrate tablets, nitroglycerin Patch, amphetamine sulfate tablets, desmopressin acetate ampules, colchicine tablets and abiraterone acetate tablets.
Biosimilars Market to Boost Revenues: Dr. Reddy’s is working with Merck Serono to develop and commercialize a portfolio of biosimilar compounds in oncology, primarily focused on MAbs. It has already expanded the biosimilars facility in India to meet the growing demand in the emerging markets.
Strategic Initiatives: The company is undertaking some strategic measures to combat the ongoing challenges. It plans to modernize some of its infrastructure, systematically implement the new quality management system and automate some of the critical manufacturing and quality-related processes.
In order to revitalize growth, Dr. Reddy’s remains focused on accelerating the development of the complex generics portfolio and making efforts to ensure that the approvals come on time through appropriate risk management and proactive measures to deal with possible deficiencies.
While sales volume was impacted in some of the company’s markets by lower prescriptions generated, and a decline in patient footfalls in pharmacies as well as clinics due to the COVID-19 outbreak, the pricing environment was relatively stable, products launches continued and depreciation of rupee against the U.S. dollar and Euro supported the business.
Other Stocks to Consider
Other top-ranked stocks in the healthcare sector include Emergent Biosolutions Inc. EBS, Bio Techne Corp TECH and Alimera Sciences Inc. ALIM. While Emergent sports a Zacks Rank #1, Bio Techne and Alimera carry a Zacks Rank #2.
Emergent’s earnings estimates have increased from $4.23 to $5.60 for 2020 and from $3.73 to $6.67 for 2021 over the past 60 days.
Bio Techne’s earnings estimates have increased from $4.54 to $4.89 for 2020 and from $5.54 to $5.72 for 2021 over the past 60 days.
Alimera’s loss per share estimates have narrowed from $2.33 to $1.31 for 2020 and from 63 cents to 52 cents for 2021 over the past 60 days.
Dr. Reddys Laboratories Ltd Price
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