CS upbeat on European pharma thanks to low macro exposure

H Lundbeck A/S

15/09/2022 10:13

** Credit Suisse has an "overweight" view on European
pharma, underpinned by the strong dollar and the sector's
relative immunity to electricity and gas shortage concerns
    ** The macro environment remains favourable, the broker
says, as pharmaceuticals' demand has limited economic
sensitivity and most firms have large USD earnings
    ** But high-profile R&D failures and Zantac liability
litigation raise concerns about the sector's "defensive"
characteristics, while the U.S. healthcare reform adds a new
medium-term challenge, CS adds
    ** It rates Roche  ROG.S  the highest among major pharma
players based on a strategic analysis, raising the stock to
"outperform" from "neutral" on expected 9.6% underlying EBITA
CAGR to 2027
    ** It is followed by Sanofi  SASY.PA  ("outperform"), while
Bayer  BAYGn.DE  ("neutral") and Novartis  NOVN.S  score the
lowest
    ** The broker cuts Novartis to "underperform" from "neutral"
on the lowest sales and earnings growth vs peers, as the company
enters a period of patent expiries and limited patent catalysts
    ** It downgrades AstraZeneca  AZN.L  to "neutral" from
"outperform" on its exposure to the U.S. healthcare reform and
declining uniqueness of drugs due to competition
    ** It forecasts UCB's  UCB.BR  2023-26 EBITDA 18-23% below
consensus and cuts the biopharmaceutical company to
"underperform" from "neutral"
    ** CS ups GSK  GSK.L  and Lundbeck  HLUNb.CO  to "neutral"
from "underperform" following significant stock underperformance

 (Reporting by Agata Rybska)
 ((agata.rybska@thomsonreuters.com))