Shore Capital downgraded AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) to 'hold' from 'buy', citing a less favourable earnings trajectory as the drugmaker prioritises revenue growth through escalating research spending.
The broker warns the current valuation looks full at 20 times forecast 2026 earnings despite confidence the company can exceed its $80 billion 2030 revenue target.
The pharmaceutical group delivered 16 positive clinical readouts in 2025, collectively expected to generate more than $10 billion in peak year revenues.
A further 20 readouts anticipated in 2026 carry similar value.
However, near-term earnings progression has slowed to 10% compound annual growth between 2025 and 2028 as R&D investment surges.
As mentioned above, AZ's shares trade ahead of both peer group multiples and historical averages.
Shore believes the premium remains justified by the diversified growth story and enviable pipeline, but sees little scope for further rating expansion given the deteriorating balance between revenue acceleration and earnings progression.
The shares, up 11% year-to-date, were 15,068p, up 1% on Friday.