AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) is looking more marathon runner than sprinter these days. The pharmaceuticals giant has spent years building a pipeline that looked sprawling and costly.
But according to Jefferies, the pieces are now starting to fit together, and the firm has upgraded the shares to 'buy' with a price target of 15,000p, about 20% above the current level.
The broker thinks AstraZeneca’s long-term ambition to hit $80bn of annual sales by 2030 is not only achievable but perhaps even cautious.
That target already sits near the market consensus of $78bn, but Jefferies argues the risk around it is lower than many believe. The biggest contributors, it reckons, will be the company’s cancer drugs and its broader biopharma division, the latter often overlooked by investors.
Oncology remains the crown jewel. Jefferies forecasts Imfinzi, AstraZeneca’s lung cancer treatment, will peak at $9bn of annual sales compared with the market’s $7.5bn forecast.
Enhertu, a drug co-developed with Japan’s Daiichi Sankyo, could reach $16bn versus consensus of about $13bn. That would more than compensate for uncertainty around some of the next-generation breast cancer and bispecific therapies still in development.
Beyond oncology, biopharma should contribute more than expected. Jefferies sees $12bn of revenue compared with consensus of $11bn, helped by less erosion than feared when Farxiga, a treatment for heart failure and kidney disease, loses patent protection.
The broker also highlights baxdrostat, a drug for high blood pressure, as a source of potential upside, and keeps faith in the respiratory franchise despite a slow start for Airsupra.
Then there is Alexion, AstraZeneca’s rare disease arm, which Jefferies thinks could become 30% larger thanks to efzimfotase alfa, a next-generation version of its Strensiq therapy.
If that plays out, Phase III trial data next year could be a bigger catalyst than investors currently appreciate.
AstraZeneca shares trade on a premium valuation already, but Jefferies argues that is deserved. It values the stock using a price-to-earnings-to-growth (PEG) ratio that assumes the company can maintain faster growth than European peers.
The shares were flat in late morning trading.