27th Nov 2023 15:09
(Alliance News) - AstraZeneca PLC may need to offer some margin certainty for its shares to push higher, despite it having a decent top-line growth outlook, investment bank Jefferies said.
Shares in the Cambridge, England-based pharmaceutical company were down 1.5% to 10,026.00 pence each in London on Monday afternoon.
Jefferies maintained its 'buy' rating for AstraZeneca, but cut its price target to 12,500.00p from 13,000.00p
Jefferies trimmed its earnings before interest and tax margin prediction for Astra to 36% for 2028, below consensus of 38%.
Jefferies said this was justified by research and development to "advance one of the best large-cap pharma pipelines".
"Our 'buy' thesis is intact based on deep dives into R&D assets outside oncology largely being ignored, offering significant upside optionality, such as Airsupra, tozorakimab, and Farxiga follow-ons," said Jefferies analysts Peter Welford, Lucy Codrington, Brian Balchin and Benjamin Jackson.
Jefferies said its forecasts sit above consensus for revenue, which might "mitigate EPS risk".
"[However] margin clarity is sorely needed for the stock to work, in our view, if we are right that consensus margins need trimming," Jefferies analysts said.
Jefferies also pointed out an "overlooked" pipeline beyond oncology assets, estimating USD4 billion in risk-adjusted sales of four key late-stage cardio and respiratory assets for 2028 being USD1.5 billion or 60% above consensus.
Non-oncology assets that Jefferies drew attention to are Astra's rescue asthma inhaler airsupra and tozorakimab which treats acute respiratory failure and smokers' cough.
By Greg Rosenvinge, Alliance News senior reporter
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