AstraZeneca’s investment in research and development is paying off but market is yet to fully recogn

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AstraZeneca PLC (LSE:AZN)’s investment in research and development is more than paying off, according to a boutique investment bank.


Berenberg on Monday lifted its price target for the stock to GBP105 from GBP100, repeating its ‘buy’ advice.


“When Pascal Soriot joined AstraZeneca as CEO in 2012, he created a strategy to restore top-line growth through R&D execution, saying, ‘If you’re not focused and if you don’t turn science into projects and move those projects rapidly, speedily through the development process, you can’t win’,” Berenberg note in an investment circular to clients. “Nearly 10 years on, we conclude that his approach has worked.”


The German bank said AZ is on track to deliver top-tier revenue growth and margin expansion. The consensus forecast is for sales to grow by 33.5% this year and pre-tax profit by 139%.


The shares trade at a small premium to their peer group; however, the long-term valuation is ‘compelling’, said Berenberg. They are currently changing hands for GBP89.57.


The median price target for AZ shares is GBP99.91, suggesting there is 11.5% upside from current levels.

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