Jefferies upgrades this pharma stock, citing overlooked 'blockbuster' drug opportunities

Published Mon, Sep 25 20236:45 AM EDTUpdated Mon, Sep 25 202310:21 AM EDT

AstraZeneca has a robust pipeline of therapies beyond oncology that investors shouldn't ignore, according to Jefferies. Analyst Peter Welford upgraded the stock to buy from hold. He also increased his price target on U.S.-listed shares to $80 from $66.50, suggesting nearly 18% upside potentially from Friday's closing price of $67.83. "We argue consensus is overlooking the potential opportunity from late stage cardio & respiratory pipeline assets, notably Airsupra, tozorakimab, and eplontersen," Welford said in a Monday note. The analyst said these R & D assets offer "significant upside optionality" and can drive earnings and sales roughly 8% above consensus estimates. He pointed to asthma therapy Airsupra as an overlooked "blockbuster rescue inhaler" that could generate roughly $1 billion more in sales, backed by a proprietary physician survey that indicated higher awareness and greater market penetration. The inhaler, which is launching in 2024, is a "de-risked asset," he said. AstraZeneca's tozorakimab drug for chronic obstructive pulmonary disease also seems underappreciated, with a potential to reach $4.5 billion in peak sales, according to Jefferies. The firm also suggests up to $3.5 billion in sales for AstraZeneca's eplontersen , a drug aimed at treating hereditary transthyretin-mediated amyloid polyneuropathy. The pharmaceutical giant is also poised to be the front-runner in breast cancer treatments. AstraZeneca's Enhertu therapy, which it is jointly developing with Japan's Daiichi Sankyo, is "rapidly becoming a breast cancer standard-of-care" and on track to reach $14 billion in sales, according to Jefferies. Another of AstraZeneca's breast cancer therapies, also being developed with Daiichi Sankyo, came out with positive news Friday. Its experimental precision drug datopotamab deruxtecan demonstrated an improvement in slowing the progression of a common type of breast cancer in a late-stage trial. The pharma stock rose after the news. Among other downside risks, Welford noted uncertainty for AstraZeneca in its upcoming lung cancer data and its CEO Pascal Soriot's plans to leave the company. Shares of AstraZeneca have declined 5.2% so far this quarter and are up less than 0.1% for the year. The stock rose more than 1% in the premarket Monday, however. — CNBC's Michael Bloom contributed to this report.