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Jefferies Sees Much Larger Market Opportunity For AstraZeneca, Upgrades To Buy

AstraZeneca Bumped To Buy On Market Opportunity|Jefferies

Jefferies’ Jeffrey Holford believes there is a much higher probability of AstraZeneca plc (ADR) AZN 3.23% achieving success with the MYSTIC study, as well as larger market opportunity, than the consensus forecasts imply.

Holford upgraded the rating on the company from Hold to Buy, while raising the price target from 5.400p to 5,800p.

Stock Upside

The analyst believes there could be “positive asymmetry” with up to 39 percent upside to the stock if the MYSTIC study is successful, as compared to a 10 percent downside if the trial fails, saying that with the “top line read out for MYSTIC now only potentially 4–5 months away we believe that the shares will soon correct for the positive asymmetry on offer.”

Holford also disagrees with the consensus forecast the AstraZeneca should hold only 6 percent of the PD-1/L-1 market by 2020.

Larger Opportunity

“The market is bearish on the probability and potential of MYSTIC with just $1.2 billion for durvalumab and $368 million for tremelimumab in consensus by 2020E across all indications,” the analyst mentioned.

On the other hand, Holford estimates that MYSTIC could drive combined peak revenue opportunity for durvalumab and tremelimumab of $7.0 billion in NSCLC, with additional revenues likely to come later from other combinations, as well as adjuvant NSCLC treatment.

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Sep 2016JefferiesUpgradesHoldBuy
Aug 2016Argus ResearchUpgradesHoldBuy
Jul 2016Argus Capital Initiates Coverage onHold

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