AstraZeneca PLC (LON:AZN) has been upgraded to ‘outperform’ by analysts at Exane BNP Paribas, as they swoon over the Anglo-Swedish drugs giant’s pipeline.
In fact, Simon Baker and co claim that no other large drug maker “has a greater concentration of value in its pipeline” than Astra.
Baker adds that, given the inherently uncertain outcome for drugs in the pipeline, there is still “considerable risk” but he’s convinced there is even greater opportunity.
“Until earlier this year, risk was the focus,” the analyst wrote in a note this morning.
Now, in light of recent successes in the PACIFIC and FLAURA studies, Astra has begun to crystallise some of its pipeline potential, establishing over US$4bn of peak sales potential from those two studies alone.
He adds: “An impressive start, but with even more to come.”
A couple of months ago, Astra’s MYSTIC phase III trial delivered some disappointing initial results which sent the share price plummeting.
Baker thinks too much focus was placed on MYSTIC while a number of other decent assets went unfairly under the radar.
Specifically, he likes the look of Astra’s benralizumab asthma treatment which he expects to get regulatory approval in the US later this year.
“With good efficacy data and least frequent dosing in the class, we see excellent commercial potential (for benralizumab)”.
Given the potential, Baker has upped his adjusted earnings per share forecast for the year by 3% this year and he expects sales to grow by 10% per annum between 2018 and 2022.
“If we were to zero the probability of the pipeline beyond Imfinzi in the PACIFIC setting and Tagrisso in 1st-line lung cancer (FLAURA), we estimate +5% sales growth over the period.”
As well as moving the stock to ‘outperform’, Baker also upped his price target to £58.
Astra shares were down 0.4%, or 21p, to £49.09 in late afternoon trade.
--Updates for share price--