Citi sees buying opportunity at AstraZeneca after recent falls

(Sharecast News) - Analysts at Citi have reiterated a 'buy' rating on AstraZeneca and a 'neutral' on GSK following the European pharma sector's first-quarter earnings season. The bank believes AZN has the best growth and pipeline across its European pharma coverage, and sees the recent retreat in its share price as a buying opportunity ahead of a "busy second-half catalyst-path".

The company has phase III trials of drugs such as Wainua, camizestrant and Datroway upcoming. However, investor caution has seen the stock drop by around a tenth over the past month alone.

"The recent 10% fall in the shares exceeds the downside risk we see from the three key PIII readouts and our downside-scenario discounted cash flow (assuming all three fail) is still 23% above the current share price," Citi said.

The bank has a 18,000p target price for the stock, which was flat at 13,620p by 1157 BST.

Citi, meanwhile, cut its target price for GSK from 2,300p to 2,100p and kept a neutral recommendation, owing to the stock's large exposure to generic competition.

"GSK's planned portfolio event around 2Q results make sense, allowing the market to assess its broader portfolio and strategy to deal with its HIV patent cliff given multiple PIIII starts and recent M&A. However, while pipeline and BD have momentum, they are not yet enough to counter GSK's large LOE exposure," the bank said.

GSK shares were down 0.3% at 1,856.5p on Monday, though still slightly below Citi's target.