AstraZeneca PLC (LSE:AZN) has kept its spot as Bank of America’s top pick in the pharmaceutical sector, with analysts raising their earnings forecasts and praising the company’s “best-in-class” drug pipeline.
The bank reiterated its 'buy' rating and lifted its price target to 14,500p, pointing to a 28% upside from current levels.
That confidence is grounded in better-than-expected first-quarter figures, including an 11% rise in sales to $14 billion and a 10% jump in earnings per share to $2.25.
Much of the excitement centres around a packed 18 months ahead, with up to $30 billion in potential drug sales riding on upcoming trial results.
Key developments include data from AVANZAR and SERENA-4 trials in cancer treatments and other studies targeting conditions like hypertension, rare diseases and obesity.
While gross margins have narrowed slightly due to pricing pressures in China and product mix, analysts see this as a short-term drag. The longer-term story is about growth: BofA expects annual earnings to rise by more than 13% between 2026 and 2029, helped by a strong line-up of new drugs.
The valuation looks "attractive”, the bank said, pointing to AZ's current price-to-earnings multiple of 13 times 2026 forecasts, well below where it believes the stock should be trading.
The report also highlighted the potential for a re-rating if key data readouts go well.
In short, AstraZeneca’s pipeline is doing the heavy lifting, and if its new drugs deliver, the shares could be in for a major revaluation.
In afternoon trading, the shares were off 1.5% at 11,194p.