French broker Natixis has upgraded its rating for AstraZeneca PLC (LON:AZN) to ‘buy’ from ‘neutral’ as its analysts feel the prospect of positive results from the group's key MYSTIC lung cancer trial gives the blue chip drugmaker “an asymmetric risk profile.”
In a note to clients, the analysts said: “We expect successful results for MYSTIC, which prompts our target of 5,738p, up from 5,000p previously, but still giving over 25% upside potential.”
READ: Billions wiped off AstraZeneca’s value as key lung cancer study fails to meet primary endpoint
However, they added: “If iMYSTIC is a failure, the valuation is 4,304p, which only offers limited downside risk of around 6%.”
In late morning trading, AstraZeneca shares were changing hands at 4,535.5p, off 0.8%, or 38p on the day.
The Natixis analysts said: “Our positive scenario draws on an analysis of various lung cancer trials which indicate that a negative PFS (progression-free survival) does not rule out a positive OS (overall survival) result. This could be the case for MYSTIC.”
The analysts said that revenues related to MYSTIC are estimated at US$3.5bn in 2023, with the potential to drive a substantial acceleration in future earnings.
At the end of July, billions were wiped off AstraZeneca’s value as its share price plunged 15% after the much-hyped MYSTIC trial suffered a serious setback.
The Phase III study – which is looking at how two of its lead immune-oncology drugs, Imfinzi and tremelimumab, work together in non-small-cell lung cancer patients – failed to meet the primary endpoint of improving progression-free survival compared to chemotherapy – the current standard of care.
Full data presentations on studies for lung cancer drugs Tagrisso and Imfinzi are expected this month.