Morgan Stanley has initiated coverage of AstraZeneca PLC (LSE:AZN) with an ‘overweight’ rating, highlighting the pharmaceutical giant’s current share price as a "compelling entry point" ahead of key developments in its drug pipeline.
In a research note published on Wednesday, the bank set a price target of 14,500p, with potential upside depending on the success of upcoming clinical trial results.
AZ, already a leader in oncology, cardiovascular, and renal treatments, is set for another year of strong earnings growth.
Morgan Stanley estimates double-digit bottom-line expansion in 2025, driven by continued sales momentum in key drugs such as Imfinzi, Enhertu, and Teszpire.
It sees a number of upcoming clinical trial readouts as significant catalysts for the stock, with potential for further earnings upgrades if results are positive.
Beyond its existing portfolio, the Anglo-Swedish drugs giant has exposure to three major high-value markets: targeted cancer therapies known as antibody-drug conjugates, advanced cardiovascular and renal treatments, and next-generation immuno-oncology drugs.
Morgan Stanley notes that these areas offer significant long-term revenue potential, particularly if AstraZeneca's pipeline assets are successfully commercialised.
One of the key focuses for investors will be the company’s progress towards its ambitious $80 billion revenue target by 2030.
With multiple blockbuster drugs in development, AZ is well-positioned to deliver sustained earnings growth beyond its near-term forecasts.
Morgan Stanley sees potential for an earnings-per-share compound annual growth rate of 11% between 2025 and 2028, outpacing most of its large-cap pharma peers.
Valuation remains a key consideration. AstraZeneca’s shares currently trade at around 15 times expected 2025 earnings, which represents a premium to the sector average.
However, Morgan Stanley believes this premium is justified due to AstraZeneca’s superior growth outlook and its ability to de-risk major pipeline assets.
In afternoon trading, AZ shares were changing hands for 11,730p, up 1% on the day.