AstraZeneca ‘Far Too Cheap’: CIO

Investors should purchase pharmaceuticals shares in firms such as Roche, AstraZeneca, Novartis, and GlaxoSmithKline, James Bevan, CIO at CCLA Investment Management, told CNBC Friday.

“I love this sector,” said Bevan. “This is a sector that has been thrown out with the bath water; it has got some really vibrant growth prospects and excellent balance sheets by-and-large.”

The CIO was particularly positive regarding AstraZeneca, which he described as “far too cheap”, with a price-to-earnings ratio of 7.

“This is a company that I think deserves a significant re-rating, without needing to do anything particularly major to grow earnings from here,” Bevan said.

The investor said AstraZeneca had net cash on its balance sheet, and was capable of growing at a compound rate of at least 7 percent per year.

In particular, Bevan said that if AstraZeneca’s drug Brilinta (a blood thinner used for stroke and heart disease prevention) gets the “thumbs up” from the medical profession, “the upside potential is far in excess of what the market is discounting.”

Speaking about the pharmaceutical sector more generally, Bevan said he was a buyer of Roche, Novartis and GlaxoSmithKline, as well as AstraZeneca.

He added: “If you asked what the difference is between Astra and Glaxo, I would say Glaxo: better company; Astra: much cheaper.”

While CCLA Investment Management holds shares in AstraZeneca, Bevan has no personal holding in the firm, nor does he have a business/banking relationship with them.