Broker snap: Jefferies cuts AstraZeneca target on respiratory concerns

13th Sep 2013 12:25

Jefferies has slashed its price target for pharmaceuticals group AstraZeneca (AZN) from 3,200p to 2,850p on the back of its concerns about the company's position in the respiratory market.The broker, which maintained its 'hold' rating for the stock, said that AZN's respiratory portfolio "does not look well equipped" to deal with the evolving respiratory market, which is likely to see pressure from new entrants, treatment modalities and the increasing presence of value brands and generics.Jefferies said: "Whilst Symbicort [AZN's asthma treatment] may benefit from potential aggressive price action from GlaxoSmithKline on Advair, its own new products come too late to the market in our view and at a time when competition and the impact of generics will be severe."Sector peer Glaxo was hit this week by news that generic versions of its top-selling asthma/COPD treatment Advair were given draft guidelines by US regulators, raising concerns about competition if these products make it to market in a few years' time.The broker said that with multi-source US Advair generics potentially coming to market as soon as 2017, it "worsens the increasingly bleak outlook for Symbicort", the broker said."With increasing risk that we see income funds rotate out of the more dividend focused pharmaceuticals stocks as visibility on tapering rises, we find valuation on AstraZeneca increasingly challenging. Our below-consensus estimates in the mid term are concerning to us and we reiterate our 'hold' rating with a lowered price target of 2,850p."The stock was down 0.34% to 3,184p by 12:37.BC