Broker snap: Credit Suisse cuts sales and earnings estimates for Astra

8th Aug 2012 11:44

Jefferies has raised its target price for AstraZeneca from 2,975p to 3,100p, but has retained its 'hold' recommendation on the shares following 'another disappointing quarter'.According to the broker, AstraZeneca will likely continue to trade in a 'bond-like' fashion as investors await the appointment of a permanent Chief Executive Officer. "Even then we believe that it will take a surprise from the R&D pipeline or incremental bolt-on acquisitions to change market perceptions of the company."The broker says that it was not impressed by the Amylin acquisition on valuation grounds and "we need to see better decision making in both business development and R&D before reviewing our opinion on the shares."Jefferies lowers its revenue and core earnings per share (EPS) forecasts for the pharma giant after a disappointing second quarter. Revenues estimates are cut by 1-2% for 2012-17, while EPS predictions fall by 4%. As for the 2012 EPS forecast, it remains at $5.93 due to a favourable one-off on the tax rate."Although recent adverse FX development is partially to blame for the negative revenue trends of late, we remain substantially (3-6%) below consensus estimates for revenues across our forecast period. Our research indicates that we have lower estimates for both Crestor and Brilinta versus consensus and that appears to drive the majority of the overall difference," the broker said."Despite the top line pressure, we remain confident that the company can maintain a degree of CORE EPS growth and a modestly progressive dividend in the mid term. This will only remain the case whilst the existing approach of aggressive cost saving and share repurchases is maintained, in our view."By 11:44, shares were trading 2.34% lower at 3,011p.BC