Morgan Stanley has issued a research report updating its financial projections for SBP GROUP (01177). The bank has largely maintained its forecasts for the company's innovative drugs. However, it has lowered its sales forecasts for generic drugs and biosimilars, citing the latest sales policies and upcoming volume-based procurement initiatives.

Concurrently, the bank has raised its revenue forecast for commercial licensing deals. This adjustment accounts for the upfront payments from Sanofi and GSK, which are expected to be booked this year, along with potential future milestone payments and new licensing revenue.

The firm's target price remains at HK$7.80, and its 'Overweight' rating is reiterated. However, the bear-case scenario target price has been reduced from HK$4.80 to HK$4.50.

Morgan Stanley has lowered its earnings per share forecasts for SBP GROUP for the years 2026 through 2028 by 2% to 3% each year when excluding commercial licensing revenue. This revision primarily reflects the reduced sales outlook for generic drugs.

When including the projected commercial licensing revenue, the bank's basic earnings per share forecasts for the company for 2026, 2027, and 2028 are increased by 13.6%, 5.5%, and 3.9%, respectively.