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Vivek Kumar
AstraZeneca
AstraZeneca’s manufacturing facility at Snäckviken in Sodertalje, Sweden.

AstraZeneca’s shares fell more than 3% on Monday after vaccine efficacy results found an average 70% effectiveness in preventing the virus, a rate much lower compared with efficiency rates of above 90% among its two biggest rivals – Moderna and Pfizer.

One dosing regimen (n=2,741) showed vaccine efficacy of 90% when AZD1222 was given as a half dose, followed by a full dose at least one month apart, and another dosing regimen (n=8,895) showed 62% efficacy when given as two full doses at least one month apart. The combined analysis from both dosing regimens resulted in an average efficacy of 70%, the company said.

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Moderna said the Phase 3 study of mRNA-1273, its vaccine candidate against COVID-19, showed that it was 94.5% effective in preventing COVID-19 and Pfizer and BioNTech announced that the first interim efficacy analysis from the phase-3 study found their jointly developed mRNA-based vaccine candidate to be over 90% effective in preventing COVID-19 among participants.

“Challenging to compare efficacy to the 95% of peers: We note several key differences vs the Moderna (MRNA) and Pfizer/BioNTech (PFE/BNTX) US Phase III studies: (1) weekly swabbing was performed to detect COVID-19 and not just confirmation of suspected cases by symptoms as in the US trials; and (2) meningococcal vaccine MenACWY used as a comparator and not placebo,” said Peter Welford, equity analyst at Jefferies.

“Importantly, AZD1222 offers the convenience of a simple supply chain, with the vaccine able to be stored and transported at normal refrigerator conditions (2-8ºC) for at least 6 months, with no specialist setting required for administration. This compares favourably to supply chain logistics for mRNA vaccines from Pfizer/BioNTech and Moderna, which can only be stored at refrigerator temps for 5 and 30 days, respectively, and require transport at -70ºC and -20ºC, respectively,” Welford added.

At the time of writing, AstraZeneca shares traded 3% lower at 8056p on Monday. However, the stock is up over 6% so far this year.

Executive Comments

“These findings show that we have an effective vaccine that will save many lives. Excitingly, we’ve found that one of our dosing regimens maybe around 90% effective and if this dosing regime is used, more people could be vaccinated with planned vaccine supply. Today’s announcement is only possible thanks to the many volunteers in our trial, and the hard-working and talented team of researchers based around the world,” said Professor Andrew Pollard, Chief Investigator of the Oxford Vaccine Trial at Oxford.

“Today marks an important milestone in our fight against the pandemic. This vaccine’s efficacy and safety confirm that it will be highly effective against COVID-19 and will have an immediate impact on this public health emergency. Furthermore, the vaccine’s simple supply chain and our no-profit pledge and commitment to broad, equitable and timely access mean it will be affordable and globally available, supplying hundreds of millions of doses on approval,” Soriot added.

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AstraZeneca Stores Stock Price Forecast

Fourteen equity analysts forecast the average price in 12 months at 9,243.08p with a high forecast of 12,000p and a low forecast of 6,400p. The average price target represents a 15.48% increase from the last price of 8,004p. From those 14 analysts, nine rated “Buy”, three rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of 9,400p with a high of 11,500p under a bull-case scenario and 6,800 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the pharmaceuticals company’s stock.

“Our price target is derived from a DCF analysis, with product-by-product sales forecasts up to 2028. We assume a WACC of 6.1%, +1% terminal growth and a reversion of ROCE to the cost of capital in the long term,” said Mark Purcell, equity analyst at Morgan Stanley.

Several other analysts have also upgraded their stock outlook. Guggenheim lowered the target price to 9,900p from 10,100p. Independent Research cuts the target price to 8600p from 8900p and rated hold. AstraZeneca PLC has been given a GBX 8,100 price target by investment analysts at Jefferies Financial Group. The brokerage presently has a “neutral” rating on the biopharmaceutical company’s stock. Credit Suisse Group set a GBX 9,500 price objective and gave the stock a “buy” rating. UBS Group set a GBX 7,300 price objective and gave the stock a “sell” rating.

Analyst Comments

“AstraZeneca (AZN) has the highest sales and EPS growth within EU biopharma over 2020-25, with the shift to specialty care driving underlying margin expansion. Our analysis shows a 52% price deflation for drugs initially impacted by the 4+7 Centralised Procurement Scheme in China and that >40% of AstraZeneca’s emerging market revenues could face generic pressures before 2025,” said Mark Purcell, equity analyst at Morgan Stanley.

“The two ADC partnered with Daiichi Sankyo, Enhertu (HER2) and DS-1062 (TROP2) both carry multi-blockbuster potential in multiple tumour types. We forecast $8.7 billion risk-adjusted peak sales for Enhertu and $4.7 billion risk-adjusted peak sales for DS-1062, with most of the value back-end loaded,” Purcell added.

Upside and Downside Risks

Risks to Upside: Positive pivotal data from the pipeline including Imfinzi+treme, tezepelumab and Enhertu, growth acceleration in EM ex-China – highlighted by Morgan Stanley.

Risks to Downside: Regulatory hurdles for roxadustat, broader pipeline failure (Enhertu, TROP2), competitive risks to the pharma pipeline and growth platforms. Impact of China VBP reform on the legacy portfolio.

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