AstraZeneca Cut to Sell as Analyst Sees Challenging Risk/Reward

AstraZeneca (LON: AZN) shares fell sharply on Friday after a downgrade by analysts at Deutsche Bank. While the stock opened higher on Monday, currently up 0.95%, it hit its lowest level in over a month last week.

Deutsche Bank cut its rating for the stock to Sell from Hold, citing a challenging risk/reward. It also slashed its price target to 10,500p from 11,000. AZN currently sits around the 12,042p a share mark.

Deutsche Bank analyst Emmanuel Papadakis told investors in a research note that AstraZeneca's TROP2 asset datopotamab will not be the next breakthrough in lung cancer.

Earlier this week, AstraZeneca said the results from its lung cancer trials revealed its experimental precision drug did not significantly improve overall survival results for patients.

As a result, the Deutsche Bank analyst believes a difficult December FDA panel for datopotamab, alongside the downside risk into fiscal 2025 guidance and key catalysts being in the second half of next year, suggests the company's stock risk/reward has now become “outright challenging” on a six to 12-month view.

Last Wednesday, analysts at Nordea also downgraded AstraZeneca downgraded to Sell from Hold. The firm said it believes the company is heading into a slower growth phase, citing the patent expiration of Farxiga in the US and pricing pressure in China.

However, taking a more positive view of the stock last week was Erste Group, which upgraded AstraZeneca to Buy from Hold, citing robust sales growth for the company's oncology products.

The firm told investors that it believes AstraZeneca's profits will increase at an above-average rate this year and also in 2025.