AstraZeneca PLC (LON:AZN) was upgraded to ‘buy’ from ‘hold’ by Jefferies as analysts believe pipeline catalysts and new launches should aid recovery of the shares.
The US investment bank hiked the target price by 7% to 8850p as the risk-reward is significantly more positive, given the pharma giant’s “compelling” growth profile within EU Pharma.
READ: AstraZeneca gets boost as WHO, EU regulator start reviews of COVID-19 vaccine
The FTSE 100 firm is nearing the closing of the US$37bn Alexion acquisition, which Jefferies said will allow entry into the “attractive” rare diseases segment with a US$6bn established C5 inhibitor franchise that AstraZeneca can expand geographically, plus immunology R&D know-how.
It will also bring in capacity to fund greater R&D spend to maximise the value of AstraZeneca's own broad pipeline, as well as hiked cash flow generation providing future financial flexibility, which will likely include mid-term dividend growth.
Looking at its own pipeline, the Anglo-Swedish group could expand Enhertu beyond HER2+ breast and gastric cancer, while blood cancer drug Calquence is expected to maintain strong sales growth and asthma treatment Tezepelumab is likely to get broad approval.
Shares were trading 3% higher at 7,202p on Tuesday morning, up 16% from March 2020 levels and down 3% in the year to date.