$RDY is Undervalued and Trending Up After Q4 Earnings Dip
Dr Reddy's (NASDAQ: RDY) is an India-based pharma company that is one of the most dynamic companies in the industry. The company is up nearly +7% YTD, though share price dipped last week after the release of Q4/FY2023 financials due to base business growth lagging behind forecasts. However, I see this recent decrease as a prime window of opportunity to establish or augment a position in RDY given the broader picture their financials paint.
Though RDY's EPS slightly missed Zacks Consensus estimate by $0.01, FY2023 EPS was $3.30 compared to $1.72 the year prior, which indicates substantial YoY growth. Furthermore, revenue was up 15% compared to last year, evidencing a strong and growing cash flow for this global pharma giant. Even more promising was the 36% YoY growth Dr Reddys' saw in the category of North American generics, a region that constituted the plurality (40%) of net global sales. These robust growth figures were buoyed by record sales in FY2023 powered by numerous new product launches (including 12 news ANDAs with the US FDA) as RDY engages additional pharma verticals.
Likewise, cashflow and cash and hand remains strong, showing that this company has the underlying capital needed to continue funding R&D and global expansion efforts. RDY's fiscal picture for the entirety of FY2023 looks overall strong and very promising for the short and intermediate-term future.
Looking at the chart, one can clearly see the dip caused by some bearish sentiment after the release of financials on May 10th. However, both MACD and Momentum indicators are trending positive, suggesting a recovery in share price ahead. Meanwhile the stock maintains an average analyst PT of $61 for 10% upside from its current $55.30; given that share price had already exceeded this consensus estimate before the release of financials, this pullback can be viewed as a temporary recalibration that lays the groundwork for sustained gains moving forward.
RDY is a solid pharma midcap with a highly profitable bottom line, significant innovative capital, an ambitious R&D pipeline and a fast-expanding global footprint. Looking forward to see where things go from here, but for now I'm LT bullish on RDY.
Though RDY's EPS slightly missed Zacks Consensus estimate by $0.01, FY2023 EPS was $3.30 compared to $1.72 the year prior, which indicates substantial YoY growth. Furthermore, revenue was up 15% compared to last year, evidencing a strong and growing cash flow for this global pharma giant. Even more promising was the 36% YoY growth Dr Reddys' saw in the category of North American generics, a region that constituted the plurality (40%) of net global sales. These robust growth figures were buoyed by record sales in FY2023 powered by numerous new product launches (including 12 news ANDAs with the US FDA) as RDY engages additional pharma verticals.
Likewise, cashflow and cash and hand remains strong, showing that this company has the underlying capital needed to continue funding R&D and global expansion efforts. RDY's fiscal picture for the entirety of FY2023 looks overall strong and very promising for the short and intermediate-term future.
Looking at the chart, one can clearly see the dip caused by some bearish sentiment after the release of financials on May 10th. However, both MACD and Momentum indicators are trending positive, suggesting a recovery in share price ahead. Meanwhile the stock maintains an average analyst PT of $61 for 10% upside from its current $55.30; given that share price had already exceeded this consensus estimate before the release of financials, this pullback can be viewed as a temporary recalibration that lays the groundwork for sustained gains moving forward.
RDY is a solid pharma midcap with a highly profitable bottom line, significant innovative capital, an ambitious R&D pipeline and a fast-expanding global footprint. Looking forward to see where things go from here, but for now I'm LT bullish on RDY.