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Dr. Reddy's (RDY) Q2 Earnings and Revenues Increase Y/Y

Zacks Equity Research

Dr. Reddy's Laboratories Ltd. RDY reported second-quarter fiscal 2020 earnings of 93 cents per share, up from 43 cents in the year-ago quarter, per American Depositary Share (ADS).

Moreover, revenues grew 26% year over year to $680 million.

Year to date, shares of the company have gained 5.7% against the industry’s decline of 1%.

Quarter in Detail

Dr. Reddy’s reported revenues under three segments — Global Generics, Pharmaceutical Services & Active Ingredients (“PSAI”), and Proprietary Products and Others.

Global Generics revenues were INR32.8 billion ($464.6 million), up 7% year over year in the fiscal second quarter. Growth was led by contributions from Europe, emerging markets and India, primarily owing to volume gains and product launches.

PSAI revenues were INR7.1 billion ($100.6 million), up 18% from the year-ago quarter.

Revenues at the Proprietary Products segment came in at INR8.09 million ($0.11 million), surging 472% year over year.

Research and development expenses were down 11% year over year to $52 million.

Selling, general and administrative expenses were $238 million, up 36% year over year.

As of Sep 30, 2019, Dr. Reddy’s had 99 generic filings (96 abbreviated New Drug Applications [ANDAs] and three new drug applications) pending FDA approval. Of these 96 ANDAs, 55 were Para IV filings and 31 have first-to-file status.

Our Take

In second-quarter fiscal 2020, Dr. Reddy’s top and bottom lines registered year-over-year growth. This was supported by strength in Europe, emerging markets and India andpickup in product launches.

However, the company expects to experience price erosion in the North America generics market which will adversely impact sales.

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise

 

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise

Dr. Reddy's Laboratories Ltd price-consensus-eps-surprise-chart | Dr. Reddy's Laboratories Ltd Quote

Zacks Rank & Stocks to Consider

Dr. Reddy’s currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the same space are AbbVie Inc. ABBV, GlaxoSmithKline Plc. GSK and Merck and Co. MRK, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AbbVie’s earnings per share estimates have increased from $8.87 to $8.93 for 2019 and from $9.29 to $9.36 for 2020 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, the average being 1.71%.

Glaxo’s earnings per share estimates have increased from $2.89 to $3.02 for 2019 and from $2.96 to $2.99 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters, the average being 17.23%.

Merck’s earnings per share estimates have increased from $4.89 to $5.02 for 2019 and from $5.35 to $5.41 for 2020 over the past 60 days. The company came up with a positive earnings surprise in the trailing four quarters, the average being 12.51%.

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