While the markdown of AstraZeneca PLC (LON:AZN) shares may well be knee-jerk and overdone, the warning from the more wily professional stock tippers is that now’s not the time to get involved.
The reason for panic (the stock is off 16%, which is unprecedented for a Footsie constituent) was the failure of the company’s lung cancer combination treatment on all measures in a final-stage clinical trial called MYSTIC.
There was a lot of hope and expectation factored into the share price ahead of the findings with AZ up 20% from January.
More normal valuation...
So in a sense, Thursday’s blood-letting is really just taking the company back to a more normal valuation.
The first London broker to puts its head above the parapet this morning was mid-ranked house Liberum, with a £49 a share ‘fair valuation’. That’s around £6, or 14% ahead of AZ’s current market worth.
It admits the MYSTIC result was “pretty much the worst case scenario”. This overshadowed the results for another phase III trial, for a drug called Tagrisso, which was a success.
Beware buying now...
The stock may be oversold on its analysis, but Liberum has these words of warning for bargain hunters.
“We would caution short term money that recovery is likely to be a long-drawn out process particularly until the detailed data from PACIFIC is reported later in the year,” it said.
Ls to beware of getting carried along by bid speculation.