AstraZeneca cut to Neutral at Credit Suisse; says valuation reflects oncology prospects
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Credit Suisse downgraded AstraZeneca (NASDAQ:AZN) to Neutral from Outperform Thursday, arguing that the company shares, following a strong YTD performance, already reflect the companyâs potential in oncology.
The analyst Dominic Lunn and the team note that AZNâs EV/NPV multiple has become less compelling following the strong share price performance this year.
According to analysts, the investors have well recognized the multi-billion-dollar peak potential of AZNâs antibody-drug conjugates for cancer, including breast cancer therapy Enhertu and lung cancer drug DS-1062.
AZN has partnered with Japanese pharma company Daiichi Sankyo (OTCPK:DSKYF) (OTCPK:DSNKY) for both compounds.
In August, the FDA approved Enhertu for adult patients with HER2-low breast cancer after a late-stage study indicated that the HER2-directed ADC improved median overall survival by more than six months vs. chemotherapy in a late-stage trial.
âHowever, after recent positive readouts, we believe that investors are up to speed with this potential which is included in our NPV,â Credit Suisse opines with an unchanged Â£110 price target on AZN.
Additionally, the firm cut its peak sales forecast for the companyâs best-selling cancer medication Tagrisso to $8B from $9B. The analysts attributed the decision to the impact of Johnson & Johnsonâs (JNJ) rival therapy amivantamab/Lazertinib and/ or U.S. drug pricing reforms, both expected to take place from 2026.
According to Credit Suisse, among European pharma majors, AZN has the highest exposure to U.S. drug pricing reforms implemented with the Inflation Reduction Act 2022.