AstraZeneca PLC (LON:AZN) continues to face pricing pressures and competitive headwinds in in key therapeutic areas, including respiratory and diabetes, according to analyst at Shore Capital.
ShoreCap cut its price target to 4,600p from 5,154p and left its rating at ‘hold’ after assessing the pharmaceutical giant’s first half results and update on clinical trials.
“With Astra trading at a premium to the sector, we see the valuation as stretched at current levels,” the broker said.
“We are lowering our price target to 4600p, with our forecasts already reflecting the opportunities from the pipeline and key cancer assets.”
Earlier this month AstraZeneca was granted ‘breakthrough therapy designation’ for its Tagrisso lung cancer drug by the US Food and Drug Administration following a successful clinical trial.
In September the company also reported positive results a phase III trials of lung cancer drug Imfinzi.
At the first half results in July, the group said it swung to net profit in the second quarter due to lower spending on research and marketing, proceeds from several licensing deals, and a favourable comparison to a year ago.
However, revenue fell as sales of new drugs struggled to offset the decline of its old best-sellers, hit by generic copycats.
ShoreCap said its double digit compound annual growth rate estimate for earnings per share between fiscal years 2018 and 2021 are reliant on the performance of key assets, including Tagrisso and Imfinzi as well as ovarian cancer treatment, Lynparza, and lymphoma treatment, acalabrutinib.
“While we see few negative catalysts we would look to take profits at current levels, and would look for evidence of momentum in the underlying growth assets before turning more positive.”
Shares in Astra dipped 0.47% to 5,130p in late afternoon trading.