Providing an interesting take on the pharma sector was Deutsche Bank, which Wednesday raised its target price on AstraZeneca PLC (LSE:AZN).
It pointed out (rightly) that a backdrop of rising inflation wouldn’t normally be a 'positive' for defensive plays such as major European drugs stocks.
However, it added: “But this being a geopolitically-challenged stagflationary-susceptible situation, normal perhaps doesn’t apply and indeed pharma has had a strong relative start to the year…that may well continue.”
EU large-cap pharma has outperformed the Stoxx Europe 600 by 15% so far this year.
The Deutsche team wonders why there hasn’t been a ‘value tilt’ towards sector laggards such as GlaxoSmithKline, Novartis and Sanofi as it notes that the stand-out performers have been the already-highly-rated AZ and Novo Nordisk (NYSE:NVO).
The German bank raised its share price target on the former to £115 a share from £105 (currently £103). At the target price quoted, stock in the Anglo-Swedish giant would be valued at a far-from-bargain-basement 23-times 2022 earnings.
Deutsche is looking out for ‘thesis affirming’ data from this year’s ASCO cancer conference.