AstraZeneca’s COVID-19 Vaccine Shows Positive Immune Response; Target Price GBX 10,970

As expected, AstraZeneca’s potential COVID-19 vaccine showed promising result in early-stage trials and said it was safe and produced strong immune responses to fight the deadly virus, according to trial results published in The Lancet medical journal on Monday, sending its shares up over 7%.

Developers of the Oxford vaccine, known as AZD1222, said the vaccine did not prompt any serious side effects and elicited antibody and T-cell immune responses. So far, the deadly coronavirus has infected over 14 million people in 188 countries and killed more than 600 thousand.

Earlier this month, the British-Swedish multinational pharmaceutical and biopharmaceutical company, said that they were satisfied by the immune response they witnessed during the trials.

Also, the WHO’s chief scientist said in June that AstraZeneca’s COVID-19 vaccine, known as AZD1222, was the most advanced in terms of development. At the time of writing, AstraZeneca shares traded 7% higher at GBX 9774.

Interestingly, Synairgen Plc, the respiratory drug discovery and development company, also announced a positive result from the trial of SNG001 among hospitalised COVID-19 patients.

After the announcement, Synairgen shares rose more than 400% to GBX 168 on Monday, up 2,581% so far this year.

Moderna started its Phase 2 trial in May and expects to start a Phase 3 trial on July 27. Our call is to buy Moderna as COVID-19 vaccine showed promising result; target price $112 in a best-case scenario.

Executive comment

“We hope this means the immune system will remember the virus, so that our vaccine will protect people for an extended period,” study lead author Andrew Pollard of the University of Oxford told Reuters.

“However, we need more research before we can confirm the vaccine effectively protects against SARS-CoV-2 (COVID-19) infection, and for how long any protection lasts.,”

AstraZeneca stock forecast

Morgan Stanley target a high of GBX 10,970 under a bull scenario and GBX 6,314 under the worst-case scenario. We second Morgan Stanley on AstraZeneca stock outlook. We also think it is good to buy at the current level and target at least GBX 10,500 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“Notably neutralising antibody titres are similar-below other COVID-19 vaccines, boosted by a possible two-dose regimen, and importantly all subjects had marked increases in effector T-cells, which may bode well for durability. View AstraZeneca share price move as overdone,” said Peter Welford equity analyst at Jefferies, who gave a price target of GBX 8,000.

Upside and Downside risks

Positive pivotal data from the pipeline including Imfinzi+treme, tezepelumab and Enhertu, growth acceleration in EM ex-China, Morgan Stanley highlighted as upside risks to AstraZeneca.

Regulatory hurdles for roxadustat, broader pipeline failure (Enhertu), operating costs exceed expectations, competitive risks to the pharma pipeline and growth platforms. Impact of China VBP reform on the legacy portfolio and impact from COVID-19 global on operations, Morgan Stanley highlighted as downside risks.

Morgan Stanley forecast sales to increase by +0.5% in 2020 and between +0.8% and +0.7% in 2021-26; EPS is expected to remain unchanged in 2020 and rise between +0.8% and +0.5% in 2021-26.