Biocon shares surge over 7% after HSBC upgraded stock to ‘buy’, raised target price

Shares of Biocon saw a significant surge of over 7 percent on Tuesday, January 14, 2025, following an upgrade by global brokerage firm HSBC. The firm raised its rating on the stock to ‘Buy’ and set a new price target of ₹430 per share, up from ₹290 previously. HSBC’s revised target suggests a potential upside of 18 percent from the stock's closing levels on Monday.

The brokerage's optimism stems from an expected operational turnaround for Biocon, driven by key biosimilar launches and a recovery in generics sales. HSBC highlighted several factors that could drive earnings growth, including the FDA’s recent clearance of Biocon’s Malaysia plant, which addresses prior concerns regarding Good Manufacturing Practices (GMP). Moreover, the upcoming launch of the biosimilar aspart from the Malaysia plant is seen as a key catalyst for the company’s growth.

Other Brokerages

HSBC's positive outlook is echoed by other major brokerage firms. Jefferies, for instance, upgraded Biocon to a ‘Hold’ rating from ‘Underperform’ and increased its price target to ₹400 from ₹280. The brokerage noted that visibility for growth in Biocon's biologics business has improved, with several significant events expected in 2025. These include the USFDA classification of the Malaysia plant, the approval of bAspart, and an anticipated ramp-up in market share for biosimilars like bStelara, bHumira, bAspart, and the generic version of Semaglutide.

Meanwhile, Motilal Oswal also upgraded Biocon to a ‘Buy’ rating on January 13, 2025, with a target price of ₹430 per share. The brokerage emphasized that Biocon's Malaysian site has now achieved ‘Voluntary Action Indicated’ (VAI) status, ensuring compliance with USFDA regulations for critical biosimilar production. This development significantly enhances the company’s prospects in the lucrative US market.

Motilal Oswal’s report also projects a strong earnings trajectory, forecasting a 21 percent CAGR in EBITDA over FY25-27. The brokerage raised its valuation for Biocon’s biologics business, now applying a 22x 12-month forward EV/EBITDA multiple, up from 18x previously, to reflect the company’s improved regulatory compliance. As a result, Motilal Oswal arrived at a target price of ₹430 per share, factoring in the company's 53 percent stake in Syngene and a 14x EV/EBITDA multiple for its generics business.

Biocon's prospects are further buoyed by its expanding presence in the biosimilars and generics markets, along with strategic regulatory approvals. The combination of positive analyst upgrades, strong future earnings visibility, and the company’s growing pipeline positions Biocon for potential growth in the coming years.

Stock Price Trend

The stock rose as much as 7.3 percent to its day's high of ₹391.40. It is now just 1 percent away from its 52-week high of ₹395.65, hit in September 2024. Meanwhile, its has rallied 60 percent from its 52-week low of ₹244.40, hit in March 2024.

The pharma stock has advanced over 33 percent in the last 1 year and over 6 percent just in January 2025.