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Jefferies ups AstraZeneca to 'buy', says it's at a 'turning point'
Jefferies upgraded AstraZeneca to 'buy' from 'hold' on Monday, lifting the price target to 5,600p from 5,075p as it said the pharmaceuticals giant is at a "turning point".
The bank said that accelerating new product launches and improving margins should deliver more than 20% core earnings per share growth in the mid-term.
"As one-off externalisation contributions decline core EPS quality is also improving, whilst the dividend once again becomes covered by the underlying business. Recovering growth, driven by the underlying business warrants a modest mid-term premium valuation."
Jefferies said several years of rebuilding the pipeline is now coming to fruition as new product launches build momentum.
After updating its model, the bank's mid-term revenue forecast is around 6% ahead of consensus.
"Our expectations for Lynparza, Brilinta, Farxiga and Fasenra are key drivers of this, reflecting the benefit of further indication expansion over the mid-term. Furthermore, over half the sales that we forecast to come from new and recently launched products between 2017A-22E, are generated by products that are already launched, or have already reported positive Phase III data, helping to de-risk expectations."
At 1530 GMT, the shares were up 0.3% to 34.71p.