HSBC downgrades AstraZeneca and five other European pharma firms

AstraZeneca was downgraded to 'reduce' from 'hold' on Friday by HSBC, while five other European pharmaceutical companies also saw their recommendations lowered by the bank.

The Cambridge-based firm’s target price was unchanged however and remains at 4500p.

HSBC asserted that on the face of things the pharmaceutical industry looks "optically attractive", but that current prospects are based on core earnings, which do not tell the full story of the sector’s vulnerability.

For AstraZeneca, much depends on the outcome of their MYSTIC study into the effects of its cancer treatment drug durvalumab.

"Our valuation already assumes a positive outcome from the pivotal MYSTIC study which suggests, on our forecasts, that more optimism than any risk of a negative outcome is priced into the shares," the HSBC note said.

Included amongst the other downgrades are Spanish firm Grifols and German-listed Merck KGaA.

"Our rationale for the downgrades includes: lacklustre news flow, risks for some that we do not believe are adequately priced in, where there is specific M&A risk and where the shares have performed well in recent months and share prices are notably (8-11%) above our target prices," HSBC added.

AstraZeneca’s shares have performed well since the turn of the year, gaining 17% since the end of January.

The company’s share price was trading 0.66% lower as of 09:30 GMT.