Credit Suisse ups AstraZeneca price target on lung cancer drug

Credit Suisse raised its target price for AstraZeneca to reflect the potential of the FTSE 100 company's Tagrisso lung cancer treatment.

On 10 April a phase 3 trial of Tagrisso was stopped two years early because of overwhelming efficacy. Credit Suisse said it assumed $3.2bn of peak sales for Tagrisso and rapid commercial development when data is published.

2020 is an execution year for AstraZeneca after its pipeline success in 2019 with treatments for breast cancer, ovarian and prostate cancer due to be approved, Credit Suisse's analysts said. The bank increased its price target on AstraZeneca shares to £90 from £85 and kept its 'outperform' rating.

"We continue to believe that the longer-term profit leverage at AZN from industry-leading sales growth is underestimated," the analysts wrote in a note to clients.

AstraZeneca's first quarter sales were 7% better than consensus and core earnings were 12% ahead with about half the sales beat due to Covid-19 stocking, Credit Suisse said.

The company reiterated its guidance for 2020 but said quarterly results would probably be volatile as coronavirus stocking and the lockdown impact on new patients ease. Oncology grew 34% and now makes up 40% of group sales.

Credit Suisse noted that emerging markets sales rose 16% and contributed 36% of group revenue despite the Covid-19 induced slowdown in China.