Divi’s Laboratories shares spurt 10%, hit new life high amid this positive news – Check analyst’s view and target

The index heavyweight — Divi’s Laboratories shares spurted 10 per cent to hit a new all-time high of Rs 5,313.80 per share on the BSE intraday trade on Monday. The stock mainly jumped after the US-based pharma giant Merck & Co’s announcement of positive results of their antiviral pill trail.  

Divi’s Lab makes the main ingredient of Merck & Co`s experimental antiviral pill – Molnupiravir. 

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The stock of the pharma major Divi’s Lab has breached its earlier high of Rs 5,269 per share, touched on September 1, 2021. While at around 01:57 pm, it was trading almost 8 per cent higher to 5201.4 per share on the BSE as compared to a 1.07 per cent rise in the S&P BSE Sensex.

Merck and partner Ridgeback Biotherapeutics on Friday said Molnupiravir could halve the chances of dying or being hospitalised for those most at risk of contracting severe COVID-19, according to the data released by the companies hailed as a "potential breakthrough" by experts, Reuters reported.

Divi’s Lab, earlier in May this year, had revealed that it was an authorised active pharmaceutical ingredient (API) maker for Molnupiravir and is allowed to supply the API to Merck`s partners in India.

Similarly, the shares of drugmakers such as Cipla, Sun Pharma, Dr Reddy`s Laboratories and Torrent Pharmaceuticals, which are jointly conducting a clinical trial in India with Molnupiravir, also soared between 1 to 3 per cent intraday today.

Leading the surge in the Indian markets on Monday, the Nifty Pharma index extended gains to a fifth session and hit a record high, up around 2 per cent on the NSE. The surge is from Divi’s Lab shares, followed by Aurobindo Pharma and Cadila Healthcare.

The market analyst and Choice Broking Executive Director Sumeet Bagadia says the stock would climb to new heights going forward and suggested to buy this stock and hold. He adds the market would witness a surge of Rs 5500-5600 per share soon amid the positive news related to company.