Berenberg slightly lowers target price on AstraZeneca

(Sharecast News) - Analysts at Berenberg slightly lowered their target price on drugmaker AstraZeneca from 105.0p to 100.0p on Friday but said they were "optimistic" about the firm's pipeline destiny.
Berenberg said AstraZeneca's third-quarter results disappointed the market, with shares underperforming its peer group following their publication, down 12% versus large pharma's 4% decline.

The German bank, which also reiterated its 'buy' rating on the stock, said Astra's results were obfuscated by its Covid-19 vaccine profit and loss statement and the first-time inclusion of newly acquired pharmaceutical business Alexion. It also noted that Tagrisso sales missed due to a China price cut to accommodate more volume and full-year 2021 guidance was only reiterated.

As a result, Berenberg updated its model after time spent with the AZN's chief financial officer and its head of BioPharmaceuticals research and development.

"We lower our sales forecasts by 1% and lower our EPS forecasts by 2-4% to reflect increased R&D spend, which puts pressure on margins," said the analysts.

"Berenberg profit forecasts are below consensus. However, our Return on R&D Investment (RORI) analysis supports management's plans to reinvest in the pipeline as AstraZeneca generates a historical and predicted return above the cost of capital."