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Investing.com - Morgan Stanley (NYSE:MS) has initiated coverage on Cipla (NSE:CIPL) Ltd. (NS:CIPLA) with an Underweight rating and a price target of INR1,400.00, citing concerns about the company’s earnings growth outlook.
The research firm highlighted Cipla’s strong presence in chronic therapies, noting the company ranks second in India’s chronic therapies segment. As of fiscal year 2025, 42% of Cipla’s revenue came from India, 29% from the United States, and 14% from South Africa.
Morgan Stanley acknowledged Cipla’s strong performance in the Indian market across respiratory, cardiology, urology, consumer health, and trade generics segments. In the U.S., the company plans to launch 2-3 peptide products in fiscal year 2026 and gSymbicort in fiscal year 2027.
The firm identified several downside risks, including increasing competition across Cipla’s portfolio and weakening gRevlimid sales due to the patent cliff, which could negatively impact margins in the second half of fiscal year 2026. Cipla’s EBITDA margin guidance of 23.5-24.5% for fiscal year 2026, compared to 26% in fiscal year 2025, reflects these headwinds.
While recognizing Cipla’s strong revenue profile and structural fundamentals, Morgan Stanley projects muted earnings growth with a -2% EPS CAGR for fiscal years 2025-2027, leading to its Underweight rating and price target based on a 22.5x fiscal year 2027 estimated P/E multiple.
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