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(Sharecast News) - Analysts at Berenberg upgraded drugmaker GSK from 'hold' to 'buy' on Tuesday and lifted their target price on the stock from £20 to £22, saying recent businessdevelopment activity and pipeline momentum had strengthened the firm's longterm growth outlook and left its valuation discount looking excessive.
Berenberg said GSK's evolution was "undervalued", noting that 10 of its 11 novel phaseIII assets had been sourced externally under new chief executive Luke Miels. It argued that six latestage programmes each carried potential peak sales of at least £2bn, helping to restock the pipeline and improve returns on R&D.
The German bank forecasts £39bn of sales in 2031, ahead of consensus and supported by recently launched products and underappreciated opportunities in bepirovirsen, Nuvalent's lungcancer assets and GSK/Hansoh ADCs. It added that margins should remain "stable to improving" despite future erosion in oral HIV brands, helped by ongoing costsaving measures.
Berenberg stated upcoming catalysts include US decisions on bepirovirsen and neladalkib by yearend, alongside key readouts over the next 12 months for RisRez in secondline SCLC, quarterly HIV dosing, and several midstage respiratory and allergy assets.
The broker added that GSK's valuation gap had become too wide, with the shares trading on 9.6x 2027 earnings versus 12.4x for European peers, and at a 22% discount on enterprise value-to-net present value ratio.
Deutsche Bank upgraded Astrazeneca from 'sell' to 'hold' on Tuesday and nudged its price target up from 11,500p to 11,700p, saying the riskreward scenario had shifted following last week's negative SERENA-4 readout and a period of underperformance against European largecap peers.
The broker noted that the stock has fallen around 3% in absolute terms since its downgrade last October and lagged the sector by roughly 10% on an FXadjusted basis.
It said part of the weakness reflected factors it had anticipated - including secondhalf event risk and patentcliff concerns - while other pressures, such as developments around Wainua and Bristol Myers, were less expected.
Deutsche Bank added that while it did not view Monday's sector bounce as fundamentally driven or likely to persist into the US midterms, Astrazeneca's valuation now looked more balanced, prompting the move to 'hold'.
Citi lifted its price target on Vodafone to 127p from 110p as it said scope for positive news was stopping it from taking a more cautious stance.
The bank said that while some investors may be inclined to turn cautious following Vodafone's recent share price rally, it remains 'neutral' rather than turning more defensive, as it sees several potential positive factors.
Citi pointed to further investor enthusiasm following Xavier Niel's investment, particularly if he were to increase his stake or seek board representation. The bank also said there was scope for near-term guidance upside, including synergy targets at the upcoming UK briefing and group-wide financial targets at the first-half results.
"There are some offsetting concerns, albeit longer-term in nature, such as our medium-term forecasts remaining below consensus in Germany and at group adjusted EPS, and any German consolidation-related news flow raising questions regarding 1&1 revenue sustainability," Citi said.