UBS hails pipeline potential at AstraZeneca, lifts target price by 10%

9th Jan 2015 10:52

AstraZeneca's (AZN) drug pipeline is still "under-appreciated", according to UBS which hiked its target price for the stock by 10% on Friday.The bank said it sees a number of "blockbuster opportunities" for the pharmaceutical group in the near term, as it lifted its target for the shares from 5,000p to 5,500p and reiterated its 'buy' recommendation."That AZN has a strong pipeline became consensus view in 2014. However, after updating our pipeline model following the capital markets day on 18 November, the shares reflect only a 20% probability for the pipeline, on our estimates, hence we believe AZN's pipeline remains substantially under-valued," UBS said.The bank highlighted eight key assets which have critical milestones in development over the next 18 months and sees a "blue-sky" sales potential from these of over $25bn by 2023. AZN is aiming for a top line of $45bn by 2023.UBS said it expects AZN to return to earnings growth from 2018, but potential pipeline success in the near term "could move this inflection point forward by one-two years".The bank sees a "very attractive risk/reward profile" for the stock, which was trading down 0.1% at 4,568p by 11:01.