Source: Sharecast
The Swiss bank now has a ‘buy’ rating on GSK, switching from a previous ‘sell’, while AstraZeneca is downgraded to ‘sell’ from ‘buy’.
It said of AstraZeneca: "Our key concern is the exposure of the company to US Medicare Part D reform, which slows our sales growth assumptions from 2025.
"We see AstraZeneca’s oral oncology portfolio as particularly exposed to the requirement for pharma to fund 20% of catastrophic cover from 2025, up from around 2%.
"This forced effective price cut, coupled with likely increased PMB formulary pressures, means we are around 5% below consensus core earnings before interest and tax for 2025/26.
"On the positive side, our view of probability-adjusted mid-stage pipeline means we are modestly above consensus by 2028/29."
In contrast, UBS said GSK would set to benefit from strong demand for its shingles vaccine Shringrix.
It noted: "We forecast Shingrix sales significantly ahead of consensus, as the recently signed China deal opens up a large volume market with attractive economics.
"We are above consensus for HIV switch rates to oral doublet/long-acting, adding a longer tail of patent protection to 2029/30.
"The current valuation offers an attractive entry point."
As at 1145 GMT, shares in AstraZeneca were down 3% at 10,568p, while GSK was largely flat at 1,581.2p.
UBS’s target price for AstraZeneca is 10,700p and 1,860p for GSK.
