Morgan Stanley sets AstraZeneca stock Overweight with £145 target

On Wednesday, AstraZeneca PLC (LON:AZN:LN) (NASDAQ: AZN), a pharmaceutical giant with a market capitalization of $224.5 billion, received a new Overweight rating from Morgan Stanley (NYSE:MS), accompanied by a price target of GBP145.00. According to InvestingPro data, the company maintains a "GREAT" financial health score, supported by strong profitability metrics and consistent dividend payments spanning 33 years. The rating reflects Morgan Stanley’s confidence in the pharmaceutical giant’s future performance, citing AstraZeneca (NASDAQ:AZN)’s recent guidance for fiscal year 2025. According to the firm’s projections, AstraZeneca’s revenues and earnings per share (EPS) are expected to grow by high single digits (HSD%) and low double digits (LDD%) respectively. This outlook builds on the company’s impressive 18% revenue growth over the last twelve months, as reported by InvestingPro, which offers comprehensive financial analysis through its Pro Research Reports.

Morgan Stanley analysts believe that this forecast has addressed investor worries regarding AstraZeneca’s sustained high investment expenditures and the potential impact of the Inflation Reduction Act (IRA) and Volume-Based Procurement (VBP) headwinds, which are anticipated to have less than a 1% impact on the company’s FY25 group sales.

The firm’s positive outlook is further bolstered by AstraZeneca’s strong product sales momentum, particularly from drugs like Imfinzi, Teszpire, and Enhertu. Morgan Stanley also sees potential for additional upside from a prospective partnership agreement and anticipates several significant pipeline readouts. These factors contribute to the firm’s expectation of positive earnings revisions for AstraZeneca, with Morgan Stanley’s long-term earnings estimates being approximately 3-11% higher than consensus estimates on the Street.

Morgan Stanley’s assessment signals optimism for AstraZeneca’s strategic direction and its ability to outperform market expectations. The Overweight rating and ambitious price target highlight the firm’s belief in the pharmaceutical company’s capacity to navigate the challenges ahead while capitalizing on its robust product lineup and promising pipeline developments. Trading at a P/E ratio of 31.9, InvestingPro analysis indicates the stock is currently trading near its Fair Value, with additional ProTips available to subscribers regarding the company’s valuation metrics and growth potential.

In other recent news, AstraZeneca has been making significant strides in the pharmaceutical sector. Goldman Sachs has revised AstraZeneca’s stock price target to GBP150.67, maintaining a Buy rating. The firm’s analysts expressed confidence in the company’s financial outlook, emphasizing a robust pipeline of products that could significantly contribute to achieving the company’s ambitious revenue goal of $80 billion by 2030.

Furthermore, AstraZeneca’s drug Imfinzi has received a recommendation for approval from the European Medicines Agency (EMA) for use in adults with limited-stage small cell lung cancer (LS-SCLC). The approval was based on the results from the ADRIATIC Phase III trial, indicating a 27% reduction in the risk of death for patients treated with Imfinzi compared to placebo.

Additionally, AstraZeneca’s Enhertu has gained approval by the U.S. Food and Drug Administration for the treatment of adult patients with unresectable or metastatic hormone receptor (HR)-positive, HER2-low or HER2-ultralow breast cancer. The approval was based on the DESTINY-Breast06 Phase III trial results, which demonstrated that Enhertu significantly outperformed chemotherapy.

On the financial front, Berenberg analysts have maintained a Buy rating on AstraZeneca stock, alongside a price target of GBP140.00. The analysts suggest that the company’s shares trading below the value of its "on-market" drugs present a potentially attractive investment opportunity.

Lastly, AstraZeneca has announced a C$820 million (US$570 million) investment in Canada, which will result in the creation of over 700 high-skilled jobs across various business areas. This investment is part of AstraZeneca’s global goal to achieve US$80 billion in total revenue and to introduce 20 new medicines to patients worldwide by 2030.

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