Broker snap: AstraZeneca downgraded by Jefferies

6th Jul 2012 10:48

Jefferies has downgraded its recommendation for pharmaceuticals giant AstraZeneca from 'buy' to hold' after the recent strong performance in the shares."The shares have traded as low as 2,578p during the last few months as weak markets and irrational fears over potential large-scale M&A that could threaten current dividend expectations have been reflected in the stock price," the broker said in a research report on Friday."As we expected, these fears have subsided as other commentators have begun to understand the importance of the dividend and share repurchase programme following reassuring commentary from management."However, Jefferies still says that it sees "major fundamental challenges" for AstraZeneca, including its clinical and business development capabilities/decision making.In the second quarter, the broker is predicting the company to report net sale of $6.71bn, down 15% year-on-year on a constant currency basis and some 6% below current consensus expectations.The broker has maintained its 2,975p target price, which is calculated by placing its 2013 earnings per share estimate on a 10-15% discount to the UK market price-to-earnings ratio.By 10:47, shares were trading 0.65% lower at 2,917.5p.Bc