On Thursday, CLSA analysts upgraded Aurobindo Pharma (NSE:ARBN) (ARBP:IN) stock rating from Hold to Outperform, despite reducing the price target to INR1,400 from INR1,540. The revision reflects a modified valuation approach, with the firm now applying a price-to-earnings (PE) multiple of 19x, a decrease from the previous 20x. This adjustment is attributed to a less optimistic earnings forecast for the fiscal year 2027.
The analysts at CLSA explained the rationale behind the rating upgrade, pointing to a significant recent drop in Aurobindo Pharma's stock price. Over the past three weeks, the shares have experienced a decline of approximately 20%, which has prompted the firm to adjust the stock's rating to Outperform.
The change in the price target comes as CLSA revised its estimates slightly and updated its valuation timeline to December 2026. The new target price is based on 19 times the estimated earnings for December 2026, trailing twelve months (TTM). This methodological shift aligns with the firm's tempered expectations for Aurobindo Pharma's financial performance in the upcoming fiscal year.
Aurobindo Pharma's stock price adjustment and rating change reflect CLSA's outlook on the company's future earnings potential. The analysts have taken into account the recent price correction and updated their valuation metrics accordingly.
The revised price target of INR1,400, down from INR1,540, represents CLSA's current expectation for the fair value of Aurobindo Pharma shares, factoring in the company's earnings prospects and the broader market conditions that may impact its performance.
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