When a FTSE 100 large falls 12% in a yr, traders begin asking whether or not the good cash is aware of one thing they don’t. AstraZeneca (LSE:AZN) has been one of many market’s most debated large-cap pharma shares, and sentiment has been weakened by a troublesome yr for it.
But on 6 October, Citi raised its goal value from £178 to £186 and saved a Purchase score. That’s not the behaviour of a dealer that thinks the enterprise is struggling.
So, is it attainable the market is pricing it like an organization operating out of concepts, when the proof more and more factors the opposite method?
Why traders are nervous
The bear case is comprehensible. Pharmaceutical valuations depend upon pipelines, patent cliffs, regulatory choices and clinical-trial outcomes. AstraZeneca shares have fallen roughly 12% yr to this point, even after some constructive medical developments.
That issues as a result of a single disappointing trial can wipe billions of kilos from anticipated future gross sales. Buyers aren’t improper to fret.
Proper now, probably the most speedy patent-cliff problem is Farxiga. US generic competitors started after the dapagliflozin compound patent expired in April 2026, contributing to a 19% fall in Farxiga gross sales in H1 2026. The bigger medium-term concern is a cluster of patents ending between 2030 and 2032, together with Tagrisso, Imfinzi, Calquence, Farxiga and Saphnelo.
Tagrisso and Calquence alone generated about $10.8bn of 2025 income.
However I believe markets typically deal with uncertainty as everlasting. In actuality, drug pipelines are continuously re-rated as new information arrives. A failed programme can damage, however a stronger one can change it.
What Citi sees
AstraZeneca shares are presently buying and selling round £162, so Citi’s goal is about 17% greater. That’s no small leap. When saying it, the dealer elevated forecasts for 2 of the pharma large’s key developments: Tozorakimab and SERENA-6.
These upgrades greater than offset the removing of forecasts for SERENA-4.
Citi now fashions peak gross sales of $7bn for Tozorakimab and $1.1bn for SERENA-6. Clearly, the dealer thinks the pipeline is strengthening, not weakening.
A dealer elevating its goal after eradicating one drug forecast tells me it’s wanting on the entire pipeline, not simply the newest headline.
There are two near-term catalysts to contemplate right here. The primary is the AVANZAR lung-cancer trial, the results of which might transfer its discounted cash-flow valuation by between -2% and +3%.
The second is Q3 outcomes, due on 30 October. Citi forecasts income of $16bn, up 6% in fixed currencies, and earnings per share (EPS) of $2.61, up 10% (AstraZeneca studies in USD).
These are thrilling numbers however they’re removed from assured, so warning continues to be smart. Trial information and quarterly outcomes can transfer the shares sharply, in both path.
My verdict
I believe AstraZeneca is price contemplating, however I wouldn’t purchase it based mostly purely on one dealer goal. I do assume the £186 goal makes the bearish crowd look too pessimistic, however the patent challenges can’t be ignored.
Generic launches might carry growing competitors, so it wants its newer oncology, respiratory and rare-disease medicines to switch the misplaced gross sales.
That mentioned, Jefferies additionally maintains a Purchase score, with a £175 goal. Not fairly as optimistic, however that score goes again to early September, when the value was solely round £116.
Total, it appears to me just like the market could also be permitting short-term worry to cloud long-term worth so it could be price contemplating.
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Mark Hartley owns shares in AstraZeneca.
