Morgan Stanley: AstraZeneca Shares at a ‘Compelling Entry Point’

Morgan Stanley initiated coverage of AstraZeneca (LON: AZN) in a note this week, giving the company’s shares an Overweight rating, citing a “compelling entry point” ahead of key clinical pipeline readouts. 

The investment bank named the pharmaceutical giant its “sector top pick” and set a £145 price target for the stock. It also described the company as an “innovation leader.”

According to Morgan Stanley, 2025 is expected to be another strong year for AstraZeneca, with double-digit earnings growth and strong product sales momentum. 

The firm noted that investor concerns over high investment spending and regulatory headwinds have eased, adding that AstraZeneca’s guidance for high single-digit revenue growth and low double-digit EPS growth for the year has served as a “clearing event” for the stock.

Morgan Stanley highlighted AstraZeneca’s underappreciated pipeline, which offers exposure to three multi-billion-dollar markets: antibody-drug conjugates for cancer, cardiovascular/renal treatments, and next-generation immuno-oncology therapies. 

The bank believes that successful clinical data from 2025 onwards could unlock significant upside potential, pushing the stock closer to its bull case valuation of £160 per share.

The bank also pointed to key upcoming catalysts, including major trial readouts for Dato-DXd in lung cancer, Enhertu in breast cancer, and camizestrant in breast cancer, which could help de-risk $19 billion in peak sales.

Despite trading at 15 times FY25 earnings, a 30% premium to large-cap pharma peers, Morgan Stanley argues that AstraZeneca’s superior growth outlook and robust pipeline justify its valuation. 

The firm sees potential earnings upgrades of 5-10% over the coming years, bringing AstraZeneca closer to its $80 billion revenue ambition by 2030.

Earlier this week, Goldman Sachs reaffirmed its Buy rating on AstraZeneca, citing its “sector-leading catalyst path” as a key driver of long-term growth.