The target implies a potential upside of around 21% from the stock’s last closing level on Thursday.
On Tuesday, Moody’s assigned Sun Pharma a Baa1/Stable rating, while S&P Global Ratings assigned a preliminary BBB+/Stable rating after factoring in the full $11.75 billion acquisition of Organon, including its existing debt and transaction funding.
Bernstein said the ratings reinforce its June 26 view that the combined company’s cash flows should be sufficient to service the acquisition debt while allowing Sun Pharma to continue investing in research and development, manufacturing and shareholder returns.
Both ratings agencies arrived at investment-grade assessments, the brokerage said in its note.
According to Bernstein, the ratings provide independent validation of its thesis that Organon’s cash generation could be amplified under Sun Pharma through market and product synergies.
The brokerage expects these synergies to unlock around $1 billion in value over the next three to four years.
Bernstein expects Sun Pharma to broadly stay away from dividends and share buybacks during financial years 2027-29.
It also believes that the integration office, operating under the direct supervision of the CEO, will prioritise synergy extraction and supply-chain integration through financial year 2028.
Shares of Sun Pharma settled 0.80% lower at ₹1,850 on Thursday. The stock is still up nearly 8% so far this year.
