The next earnings season for European pharmaceuticals is shaping up as a test of discipline rather than momentum, with UK stocks firmly in the spotlight.
That is the message from Deutsche Bank, which says the sector’s strong start to the year has already pulled forward some optimism. After a robust rally, the bank is turning more cautious and argues that stock selection will matter more than broad exposure.
In the UK, the tone is mixed. AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) remains rated 'sell', though Deutsche lifted its price target to 11,000p, reflecting confidence in medium-term delivery even as valuation looks stretched.
GSK PLC (LSE:GSK, NYSE:GSK) stays at 'hold', with a higher 1,675p target, as steady execution and income appeal offset more limited growth.
The wider sector no longer looks cheap. Deutsche puts European pharma on around 15 times earnings, with a 3.2% dividend yield. Even so, the bank expects a reasonable year ahead.
Sales growth is forecast in the mid-single digits on average, with earnings growth running faster, helped by cost control and product mix.
Crucially, 2026 looks rich in catalysts. Pipeline updates, trial data and regulatory decisions are likely to drive share price moves, raising the stakes for results commentary.
Outside the UK, Deutsche's preferred large-cap ideas are Novartis and Novo Nordisk, while Genmab and UCB top its mid-cap list. For British investors, the implication is clear.
The easy gains may be behind the sector, but selective exposure could still pay off if delivery matches expectations.