[基础分析] Dr. Reddy's Laboratories

何鸿燊

By: Bill Wilton
October 29, 2010 | Comments: 0

Dr. Reddy’s Laboratories (RDY ) is coming off of another solid quarter that has analysts rapidly raising full-year estimates.

While the stock is up recently, given the valuations it is not to late to get into this Zacks #1 Rank (Strong Buy).

Company Description

Dr. Reddy’s Laboratories is a global pharmaceutical company that offers proprietary and generic medications, as well as pharmaceutical services. The company operates in many different areas of medicine and his headquartered in India.

By volume, Dr. Reddy’s is the fastest growing international branded generic company, according to a press release.



While many are investors are still trying to figure out just what impact health care reform will have in the coming year, the changes in the U.S. will not make or break Dr. Reddy’s.

Revenues are spread fairly evenly throughout the world. Major regions break down as follows; North America represents 30% of revenue, Europe at 26%, India at 17% and Russia at 13%.

Good Quarter

On Oct 23 Dr. Reddy’s reported quarterly revenue of $420 million, up $8 million since the same period last year. The profit of $64 million was 32% higher on a year-over-year basis.

Analysts for Dr. Reddy’s do not provide quarterly estimates, so this was not a surprise, per se, but it was encouraging enough for them to raise their full-year outlooks.

In the past 30 days the Zacks Consensus Estimate for this fiscal year is up 36 cents, to $1.53. Next year's estimates jumped 69 cents, to $2.21. These levels represent growth rates of 80% and 44%, respectively.

Valuations

P/E ratios for Dr. Reddy’s look a bit lofty, at 24 times this year's estimate and 17 times next year, but that does not tell the whole story. We have to take the growth rates into account, giving us a PEG of 0.97.

Not only is that a solid value, using 1.0 a bench mark for discounted growth, but it is ahead of its industry average. Companies similar to Dr. Reddy’s are averaging a PEG of 1.28.

The Chart
Shares of RDY are on a tear right now and the stochastic is nearing "overbought" territory. However, historically that has not been a problem for the stock, as you can see below.





Dr. Reddy’s Laboratories - ticker RDY

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service