The US broker also raised its target price for the FTSE 100-listed firm to 5,600p, up from 5,075p previously, with the shares trading at 4,865p in mid-morning trading.
In a note to clients, Jefferies’ analysts said: “ Accelerating new product launches and improving margins should deliver over 20% CORE EPS growth in the midterm.”
They noted that 2018 is the nadir for AstraZeneca’s CORE EPS, pressured by increased new drug launch spending and the final Crestor generic overhang.
The analysts added: “As one-off externalisation contributions decline CORE EPS quality is also improving, whilst the dividend once again becomes covered by the underlying business.”
They pointed out that several years of rebuilding the pipeline is now coming to fruition for the drugs firm as new product launches start to build momentum.
The analysts concluded: “Recovering growth, driven by the underlying business warrants a modest mid-term premium valuation.”