AstraZeneca PLC (LSE:AZN) shares climbed 1.6% in early trading, adding £2.9 billion to the company’s market value after UBS upgraded its rating to 'buy' from 'neutral'.
The investment bank raised its price target from £115 to £142, citing AZ’s strong drug pipeline and long-term growth potential.
UBS believes AZ is well-positioned for industry-leading sales growth, forecasting a 6% annual increase through to 2030.
It estimates AZ’s late-stage drug pipeline could contribute an additional $17.6 billion in revenue, provided key treatments receive approval.
Unlike previous years, where growth relied heavily on one or two blockbuster drugs, UBS notes AZ now has a diversified pipeline of new medicines that could drive sustained expansion.
Key drug approvals on the horizon
This year will be critical for AZ, with trial results expected for seven major new medicines. Analysts highlight that AZ’s broad pipeline reduces its dependence on any single treatment, improving its risk profile.
UBS sees significant upside in AZ’s existing treatments. The bank is particularly optimistic about Imfinzi, an oncology drug, forecasting sales $1 billion ahead of market expectations due to promising trial results in lung and bladder cancer.
Another key drug is Breztri, a respiratory treatment, which UBS expects to exceed current market forecasts following upcoming trial data.
However, UBS warns that Lynparza, an ovarian cancer drug, could face steeper competition from generic alternatives, potentially leading to faster-than-expected declines in sales.
Addressing China concerns
Investor fears over AZ’s exposure to the Chinese market have eased, according to UBS. The company recently confirmed that its financial liability related to alleged illegal drug importation in China is under $10 million—far lower than some had feared. Additionally, Chinese regulators continue to approve new AZ treatments, suggesting confidence in its drug portfolio.
Valuation
UBS argues that AZ’s current valuation, though at a premium to some rivals, is justified given its strong commercial execution and industry-leading pipeline. With a pivotal year ahead for new approvals, UBS sees AZ as one of the most compelling investment opportunities in the pharmaceutical sector.