The re-rating will occur once the merits of the recent US$39bn acquisition of Alexion start to filter through, it said in its latest note.
At the same time, we are likely to see margin expansion and increased free cash flow generation that belies the current discount rating of the stock versus the wider sector, JPMC added.
It also pointed out there are a number of drug trial read-outs later this year and early next that could act as a catalyst for the share price.
Resuming its coverage of AZ with an ‘overweight’ recommendation, JPMC said the shares were worth GBP100 each based on its assessment of prospects for Britain’s largest pill maker.
Mid-morning they were changing hands for just under GBP83 each for a gain of around 2%.
“We see Astra’s sector discount unwinding, as the Alexion acquisition demonstrates continued strong top-line growth, coupled with significant operating margin expansion and increased free cash flow generation,” the broker said in its latest note.
“We also see a number of upcoming pipeline catalysts, with the potential to drive long-term upgrades and multiple expansion.”