Laurus Labs Ltd. shares jumped by up to 10 per cent on Thursday, January 30, following the U.S. approval of an “emergency humanitarian waiver” that ensures continued access to U.S.-funded HIV treatment across 55 countries.
The stock declined by more than 15 per cent on Monday following the U.S. government’s directive to halt the President’s Emergency Plan for AIDS Relief (PEPFAR), which would have disrupted the supply of antiviral medications for millions.
On January 28, U.S. Secretary of State Marco Rubio issued a temporary waiver on the pause of “life-saving humanitarian assistance,” including the PEPFAR program. However, the waiver excluded services related to abortion, gender, diversity, transgender issues, and non-life-saving initiatives. The White House announced this decision on January 29, and it was widely welcomed by global health organizations.
“This waiver approves the continuation or resumption of life-saving humanitarian assistance which applies to core life-saving medicine and medical services, including HIV treatment, as well as to supplies necessary to deliver such assistance,” UNAIDS said in response to the US approval.
Laurus Labs promptly clarified to the exchanges on Monday that a potential funding freeze would not have a significant impact on its business.
The company noted that the Anti-Retro Viral (ARV) market is valued at $1.5 billion, accounting for 10 per cent of the total annual HIV financing budget.
Last week, Laurus Labs announced its December quarter results, with its EBITDA margin reaching 20 per cent for the first time in seven quarters. The management also reaffirmed its full-year guidance.
Buy or sell?
Motilal Oswal has maintained a ‘Buy’ rating on Laurus Labs’ stock, highlighting that the company outperformed its Q3 FY25 earnings estimates. “Laurus Lab significantly beat our earnings estimates in Q3 FY25, led by a scale-up in the CDMO segment…We raise our earnings estimates by 4 percent/3 percent/3 percent for FY25/FY26/FY27 to factor in a) improved visibility for execution of CDMO contracts, b) a gradual uptick in ARV formulation sales, and c) better operating leverage. We value Laurus at 40x 12M forward earnings to arrive at a target price of ₹720,” the brokerage firm said.