Proactive Investors - JP Morgan has maintained its bullish stance on AstraZeneca PLC (LON:AZN) in the wake of the San Francisco healthcare conference it sponsors.
Repeating its overweight stance £130 a share price target, the US bank provided its assessment of a Q&A session fronted by AZ's CFO Aradhana Sarin, which presented a robust outlook for the company.
Sarin focused on the potential of the drug giant's pipeline, which includes the intention to launch 15 new therapies by the end of the decade. This prospective contribution from the pipeline is yet to be fully factored into consensus estimates, according to JPM.
The company has reiterated its commitment to maintaining the 2023 research and development to revenue ratio into 2024, even amidst strong organic growth in the pipeline and recent acquisitions.
This is expected to support another year of double-digit earnings per share (EPS) growth, potentially allaying market concerns about a significant slowdown in growth, the bank said in a note to clients.
Looking at the pipeline, AstraZeneca (NASDAQ:AZN) is on track to meet its medium-term revenue growth guidance with a low-double-digit compound annual growth rate (CAGR) out to 2025, from a 2021 base.
Post-2025, the company aims to deliver industry-leading growth, driven by its existing portfolio, life cycle management, and new molecular entities/biologics licence applications (NME/BLAs).
The company is also focused on expanding its operating margin to the mid-30s per cent in the medium term. In 2024 and beyond, R&D expenses are expected to remain in the low 20s per cent range, despite further phase III trial starts and recent deals in areas like GLP-1, RSV/MPV vaccines, and CAR-T therapies, JPM noted.
One of the highlights from the conference was the expected FDA acceptance of the Dato-DXd TL01 filing in 2L+ lung cancer within the first quarter of 2024. The final overall survival (OS) data from TL01 is anticipated during the FDA review period.
Additionally, AstraZeneca's recent acquisition of Icosavax, particularly its virus-like particle (VLP) platform and RSV/hMPV vaccine, bolsters the company's vaccine offering, JPM said.
The company, meanwhile, noted significant potential in applying cell therapy to autoimmune diseases, with notable transactions in 2023 emphasizing this focus.
In terms of upcoming data presentations, phase I data for the oral once-daily GLP1 ECC5004 are expected soon, with plans for two phase II studies in Type 2 Diabetes (T2D) and obesity in 2024.
Confidence remains high in the success of the Phase III LAURA study for Tagrisso in Stage III Unresectable Lung cancer, expected this quarter.
Further growth potential for Enhertu is anticipated based on upcoming readouts for DB06 and DB09. The National Comprehensive Cancer Network (LON:NETW) (NCCN) guidelines have been updated to reflect approvals in endometrial and cervical cancer, with the potential for a HER2+ tumour agnostic approval still being considered, JPM said.
In morning trade, the stock was trading sideways at £108.08.