AstraZeneca PLC (LSE:AZN) is the best bet in the pharma sector according to analysts at JP Morgan and even after a recent share price recovery there is still lots of value to be had, says the US bank.
The pharma’s medium-term growth prospects are yet to be fully reflected in the Anglo-Swedish group’s valuation, said the bank in a note.
JPM sees Astra achieving core earnings growth of 33%, 27% and 23% in the next three years, ex the COVID-19 vaccine, with an average of 9% annual growth in the three years after that.
Earnings will be underpinned by rapid growth in sales, adds the broker with ex-COVID-19 vaccine sales Astra achieving 22% growth in 2021 and 25% growth in 2022, when acquisition Alexion will start to chip in heavily.
“Astra still trades on only 14.5x 2023e Core PE, a two-turn discount to the EU large-cap Pharma [sector],” it adds, despite Astra earnings growth and having a stronger post-2026 outlook, given Astra’s comparatively young on-market portfolio, and deep late-stage pipeline.
“Given our forecast for a strong growth outlook and the compelling valuation, we remain ‘overweight”, with Astra remaining a top pick in the sector.”
JPM has a 10,000p target price, with the shares flat today at 8,769p.