Broker tips: AstraZeneca, Enquest, FirstGroup

Analysts at Berenberg reiterated their 'buy' recommendation with a 120.0p target price for shares of AstraZeneca following the release of the company's clinical trial results for its treatment against metastatic breast cancer.

The results for Enhertu in HER2-low breast cancer were released at the plenary session of the American Society of Clinical Oncology and delivered "data fit for a queen", analysts Luisa Hector, Kerry Holford, Diana H W Na and Ellie Roberts said in a research note sent to clients.

Enhertu showed the potential to extend survival for a further 50% of metastatic breast cancer patients with HER2-low breast cancer.

In comparison to physicians' choice of chemotherapy, it reduced the risk of disease progression by half and that of death by 36%.

Significantly, a similar magnitude of benefits was observed across all sub-groups.

In financial terms, the analysts believed the results had secured at least another $2bn of potential sales.

With a 60% probability of success, their forecast for Enhertu's peak sales was $10bn.

As an aside, they pointed out that the next key pipeline event for the firm would be read-out for the Dato-Dxd trial into its antibody drug conjugate treatment for 2L lung cancer expected in early 2023.

Analysts at Barclays downgraded their recommendation for shares of Enquest on the back of the government's recently announced plan for a levy on energy companies' profits.

The recommendation went from 'neutral' to 'underweight' with the analysts estimating the tax would reduce the outfit's free cash flow across 2023-26 by $450m.

That equated to a 36% cut to the company's discounted cash flow valuation and put Enquest's debt refinancing plans back in focus "just as higher oil prices and improved operating performance had eased concerns."

In turn, the analysts lowered their target price for the shares from 40.0p to 23.0p.

Analysts at RBC hiked their target price for shares of FirstGroup on the back of improved estimates for the company's UK bus and rail franchise.

Linked to the above, they deemed the recent takeover offer from I Squared valuing the company at 118.0p per shares as too low.

"We expect FirstGroup shares to outperform further on a longer term view, although near term share price performance is likely to depend on whether a firm offer on improved terms is made," analyst Ruairi Cullinane said in a research report sent to clients.

RBC said that on its improved estimates the shares' target price was now 160.0p instead of 115.0p, implying an Enterprise value-to-earnings before interest and taxes multiple of approximately eight times for 2022/23.

That compared to the 7.3 offered by I Squared.

The analyst also noted that previous transaction multiples were generally in the 10-16.0 times' EV/EBIT range.

"We expect FirstGroup shares to outperform further on a longer term view, although near term share price performance is likely to depend on whether a firm offer on improved terms is made."