Jefferies Provides Updated Ratings for GSK and AstraZeneca
Analysts at Jefferies recently made updates to their ratings for GSK and AstraZeneca, with a Buy rating for GSK and a Hold rating for AstraZeneca. The price targets were also adjusted, with GSK’s target rising to 1,900p per share and AstraZeneca’s falling to 11,000p. These changes were part of a broader note covering European Pharmaceutical stocks.
Jefferies expressed positivity toward sector fundamentals but highlighted potential headwinds in 2024, a scarcity of major catalysts, US political uncertainties, and macroeconomic shifts. They also identified Novartis as their top pick, maintaining a Buy rating for the company.
For GSK, the upgrade was based on the perceived near-term risk-reward. The analysts noted the potential of long-acting HIV injectables, vaccines, and new pipeline launches, indicating that profits are likely to face a ‘blip’ rather than a ‘cliff’ when the HIV patents expire in 2028 and beyond.
Jefferies argued that GSK’s growth profile is underappreciated and that the stock offers an attractive risk-reward, particularly ahead of a potential Zantac class action settlement. They also emphasized that NPVs suggest the stock is deeply discounted.
Conversely, AstraZeneca’s shares were impacted by margin concerns, leading to the downgrade from Jefferies. The firm highlighted the company’s focus on top-line growth and its pipeline, but also underscored the need for margin clarity for potential upside. Additionally, they mentioned the lack of major pipeline catalysts in 2024, prompting the downgrade to Hold.
Despite these rating changes, analysts pointed to the broader potential of R&D assets outside of oncology, suggesting significant longer-term upside optionality that is being largely ignored.
