AstraZeneca share price subdued as Goldman Sachs advises selling

Shares in AstraZeneca (LON:AZN) closed lower yesterday, underperforming the broader market, as Goldman Sachs reaffirmed its bearish stance on the company and lowered its valuation on the shares. The move marks a blow for the blue-chip pharmco in the wake of a key oncology trial disappointment last month.

AstraZeneca’s share price lost 0.86 percent to close at 4,453.00p, underperforming the broader UK market, with the benchmark FTSE 100 index closing 0.38 percent higher at 7,365.26 points. The group’s shares have lost more than 10 percent of their value over the past year, but have recovered about 0.4 percent in the year-to-date.

Goldman Sachs, which has a ‘sell’ rating on AstraZeneca, trimmed its price target on the shares from 3,900p to 3,800p. The Financial Times quoted the analysts telling clients that long-term forecasts for the company were much too high as investors remain overly optimistic about the drugmaker’s base business. The broker further argued that continued weak sales of the pharmco’s heart drug Brilinta and its diabetes portfolio countered hopes that key drugs will return to growth.

Goldman also noted that investors expected AstraZeneca’s pipeline drugs to deliver $8.5 billion in sales by 2022, with the forecast overlooking the group’s increasingly stretched balance sheet, which will require asset sales to service $14.5 billion of net debt. Yet AstraZeneca trades at a 61-percent premium to European peers, a valuation which “leaves little room for execution mis-steps or disappointments”, the analysts pointed out, as quoted by the FT.

The comments mark a blow for AstraZeneca which has been counting on its new drug pipeline to help the company return to growth, with its best-selling treatments suffering competition from cheaper generics. Earlier this week, however, the company received a boost as US regulators approved its oncology treatment Faslodex for wider use in women with breast cancer. 

As of 08:16 BST, Thursday, 31 August, AstraZeneca plc share price is 4,458.00p.