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UBS analysts shook up their ratings of European drugmakers, including making a double-downgrade of AstraZeneca and a double-upgrade of U.K. rival GSK.
UBS took its ratings on AstraZeneca
AZN,
AZN,
to sell from buy, while it upgraded GSK
GSK,
GSK,
to buy from sell. It also upped Novartis
NOVN,
NVS,
and Sanofi
SAN,
SNY,
to buy from neutral, and Novo Nordisk
NOVO.B,
NVS,
to neutral from sell.
Analysts led by Matthew Weston say sector valuations are not demanding excluding weight-loss drug maker Novo Nordisk, trading at 13.8 times projected 2024 earnings ex the Danish drugmaker.
On GSK, it forecasts Shingrix sales significantly ahead of consensus, buoyed by a recent China deal. UBS also is more positive on Novartis cancer, chronic spontaneous urticaria and MS drugs than consensus. It is worried about AstraZeneca’s exposure to Medicare Part D reform, particularly its oral oncology portfolio.
On Novo Nordisk, “while we can justify current levels based on growth and earnings momentum, we struggle to stretch the valuation further to justify a more positive stance,” the analysts said.
AstraZeneca shares slumped 3% in London, while the other pharma stocks saw limited moves.
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