Jefferies says 'Buy' this strong pharma stock even after cutting target — Here’s how much you could earn from Zydus Lifesciences

The stock had closed at Rs 890 on Wednesday, and while brokerages have recently reduced target prices, they still see room for a substantive upside — provided investor hopes match up with management's revised guidance.

Jefferies lowers target to Rs 1150, but maintains 'Buy

Jefferies reduced its 12-month target on Zydus Lifesciences to Rs 1150 from Rs 1350, which translates into an upside potential of more than 28 per cent from here. The brokerage still has faith in the firm's long-term narrative supported by a strong pipeline and stable margin assumptions, "Zydus is running well, but moderation in FY26 margins deserves a realistic reset of expectations," Jefferies said.

What other brokerages said

Nomura: Retained Buy with reduced target of Rs 1140. It highlighted a Q4 EBITDA miss due to lower Revlimid contribution but valued Zydus' FY26 guidance.

JP Morgan: Downgraded to Neutral, reduced target from Rs1140 to Rs 1000.

Macquarie: Bullish with Outperform, highest target of Rs 1365.

Citi: Highlighted pricing pressure in Revlimid and softer US momentum but recognized potential upside from new generics such as Myrbetriq.

Q4 performance: Margins hold up

Zydus posted revenue and EBITDA numbers 2 per cent higher than Macquarie estimates, and the adjusted net profit was 6 per cent short. Gross margin was at 64 per cent, a beat over the street forecast of 62 per cent.

Management guided towards 26 per cent+ EBITDA margin in FY26, a bit lower than consensus but encouraging considering US pricing headwinds. US revenues to grow at high single digits after soft FY25. "Zydus is battle-hardened, and notwithstanding US headwinds, FY26 growth clarity and protection of margins make it a good long-term wager," said a fund manager who follows the stock.

Should You Invest?

At Rs 893, the stock trades at a reasonable valuation. Even with Jefferies’ revised target of Rs 1150, investors could see returns of over Rs 250 per share — a potential 28.8 per cent gain.

But walk carefully. If US price erosion persists or Revlimid weakness worsens, Zydus might not be able to achieve its aggressive FY26 margin guide. But if execution strengthens and generic launches scale up, the upside might surprise.

Zydus Lifesciences has charted out an ambitious agenda for FY26. Jefferies is a believer — with reservations. For investors, it's a 'Buy the dip' opportunity with risk calculated. Keep an eye on the Rs 900 level — any volume-backed breakout could unleash a new upside.