The share price of Sun Pharmaceuticals Industries (Sun Pharma) is shining bright, the top gainer in intra-day trade, up 3%. This surge in the share price came after the company announced an acquisition of US-based biotech company Checkpoint Therapeutics.
Adding to the development, the brokerage firm Motilal Oswal has maintained its ‘Buy’ rating on Sun Pharma, setting a target price of Rs 1,970 per share, indicating an upside potential of 22% from current levels.
Let’s take a look at the key reasons behind the stock’s rally and why brokerage is bullish on it.
Sun Pharma’s $355 million bet on checkpoint therapeutics
Recently, Sun Pharma has acquired Nasdaq-listed Checkpoint Therapeutics in a deal worth $355 million (approximately Rs 3,099 crore).
In the exchange filing on Monday (March 10), the company said, “Checkpoint is a Nasdaq-listed commercial-stage company focused on developing novel treatments for patients with solid tumor cancers. Checkpoint has received approval from the U.S. Food & Drug Administration (FDA) for UNLOXCYT™ (cosibelimab-ipdl) for the treatment of adults with metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC who are not candidates for curative surgery or curative radiation.”
According to the transaction details, Sun Pharma will acquire all outstanding shares of Checkpoint at an upfront payment of $4.1 per share. Shareholders will also receive a contingent value right of $0.7 per share upon achieving specific regulatory milestones. The acquisition is expected to be completed by the second quarter of the calendar year 2025 (Q2CY25).
Motilal Oswal on Sun Pharma: Acquisition to drive growth
The brokerage, Motilal Oswal remains bullish on Sun Pharma, citing its recent acquisition of the US based Checkpoint Therapeutics as a game-changer. The brokerage notes that this acquisition strengthens Sun Pharma’s presence in the high growth oncology segment, particularly with the introduction of PD-L1 inhibitors, an effective class of cancer treatments.
“Sun Pharma’s move to acquire Checkpoint Therapeutics expands its oncology portfolio significantly. The acquisition of Unloxcyt (Cosibelimab), an FDA-approved drug for cutaneous squamous cell carcinoma (cSCC), marks a strategic entry into the PD-L1 space, known for its strong commercial potential,” added the brokerage in its report.
The brokerage highlights three key reasons for its positive stance-
- Sun Pharma will now have a foothold in PD-L1 inhibitors, a market with growing demand and high commercial potential.
- Unloxcyt is positioned as an effective cancer treatment with fewer side effects compared to existing options, making it a competitor in the oncology market.
- The drug’s potential for expanded indications through combination therapies enhances its revenue prospects.
“We largely maintain our estimates for FY25/FY26/FY27 and see a robust growth trajectory ahead,” the report added. Motilal Oswal values Sun Pharma at 30x its 12-month forward earnings, with a target price of Rs 1,970.
Sun Pharma stock performance
In today’s session, Sun Pharma’s share price surged over 3%, hitting an intraday high of Rs 1,661.95. Currently, the stock is trading at Rs 1,662.60 apiece.
Over the last five days, Sun Pharma’s stock has gained nearly 6%. However, on a one month basis, it has seen a marginal decline of 2%. In a broader view, the stock has corrected by 10% in the last six months, but it has posted a 4% gain on a yearly basis.
Looking at the YTD performance, the share price of Sun Pharma has declined by nearly 12%.