Dr. Reddy’s Laboratories Ltd (RDY)

Dr. Reddy’s Laboratories Ltd. (RDY) is an integrated global pharmaceutical company.  The company provides over-the-counter (OTC) drug products through its Global Generics Segment, pharmaceutical services and ingredients through its custom pharmaceutical services (CPS) business, and new chemical entities (NCE) through its Differentiated Formulations business.

For fiscal year 2014, revenues were up 14% year over year to $2.2 billion, beating the Zacks Consensus Estimate of $2.15 billion.  However, earnings came in at $2.10 per American Depository Share (ADS), short of Zacks Consensus Estimate of $2.18.

Research and Development (R&D) expenses increased 62% to $207 million during the fiscal year.  In addition, Dr. Reddy made 13 filings in the US, and on June 27th, Dr. Reddy announced it had launched Duloxetine Delayed-Release Capsules USP 20 mg, 30 mg, and 60 mg, the generic equivalent of Cymbalta.  Cymbalta is one of the leading prescription drugs used to treat depression and anxiety, as it had sales in the U.S. of roughly $5.04 billion for the 12 months ending in April 2014, according to IMS Health.

On June 25th, just a few days before Dr. Reddy released its Duloxetine medication,the company announced it had launched Paricalcitol Capsules, the generic equivalent of Zemplar in the US market.

Despite the high R&D costs, the Generic segment has performed exceedingly well.  As Dr. Reddy continues release new generic products, its further establishing its portfolio as a mix of both generics and limited competition productions.

The self-learning algorithm from the I Know First Top Stock Picks and S&P 500 forecast on July recently recommended RDY for the 1-month time horizon. The stock was the top-performing asset in the forecast with a return of 10.14%. The average return from this forecast was 2.12% beating the S&P 500’s return of .73%.

The color-coded forecast is very easy to read where green indicates a bullish signal and red indicates a bearish signal. Deeper greens signify that the algorithm is very bullish and vice-versa for deeper reds. The signal is the number flush right in the middle of the box and the predicted direction (not a specific number or target price) for that asset, while the predictability is the historical correlation between the prediction and the actual market movements. In other words, the signal represents the forecasted strength of the prediction, while the predictability represents the level of confidence. These are two independent indicators but consider both as you make your own analysis. In this forecast RDY had a fair signal of 57.52 and a very strong predictability of 0.18. While Dr. Reddy’s Laboratories LTD. was only the 5th best-recommended pick, the algorithm highlighted its bullishness with a deeper green color.

– Joe Stempel, I Know First Intern