AstraZeneca started at buy at Goldman, which rates GSK a neutral

By Steve Goldstein

Goldman Sachs started coverage of AstraZeneca at buy as it rated rival pharmaceutical company GSK a neutral.

Analysts led by Rajan Sharma said AstraZeneca is its preferred name in European pharma as it started with a price target of 15,200 pence, or $97 per U.S.-listed share. AstraZeneca (UK:AZN) (AZN) rose 1% to 12,048 pence, extending year-to-date gains to 14%.

"We believe the company offers an attractive combination of a strong underlying business with room for margin expansion, coupled with an unrivaled pipeline optionality driven by a best-in-class pipeline and track record of execution," they said, calling the company an oncology powerhouse. They added the ex-oncology pipeline is potentially overlooked by the market.

On GSK, they set a 1,850 pence target, or $47 per ADR. The analysts said positive momentum is in the current price after spinning off Haleon, "exceptional execution" on vaccines Shingrix and Arexy, and consistent earnings growth.

Zantac litigation will remain an overhang on the stock, they added, with about 78,000 state court trials remaining,

"To drive a material re-rating from here, and in line with our stock selection framework, we believe pipeline delivery ex-vaccines will be required to provide the market with comfort that the transformation is on track and long-term targets are achievable," they said.

GSK shares (UK:GSK) (GSK) slipped 0.4% to 1,740 pence but has gained 20% this year.

-Steve Goldstein

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05-30-24 0634ET

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