Jefferies upgrades GSK to 'buy', cuts AstraZeneca to 'hold'

"We are positive on sector fundamentals but see 2024 headwinds: a relative scarcity of big catalysts, US political overhangs, and macro rotation," Jefferies said in a research note on Wednesday.

The broker said Swiss firm Novartis was still its top pick in the sector, but also rates French peer Sanofi as a 'buy'.

As for UK-listed GSK, analysts said its net present value suggests the stock is "deeply discounted", as it lifted its recommendation and target price by 23% to 1,900p.

Jefferies' GSK estimates for 2026 and beyond are "well above consensus" as it reckons profits are only likely to face a "blip, not cliff" when HIV patents expire in 2028. This is due to the company's long-acting HIV injectables, vaccines, and new pipeline launches, it said.

Turning to AstraZeneca, margin concerns are a downside for the stock, as Jefferies lowered its stance and cut its target pice by 12% to 11,000p.

The note said: "We argue AZN is primarily a top-line growth and pipeline story, with our above consensus revenues mitigating EPS risk. However, margin clarity may be needed for stock upside and 2024 has fewer major pipeline catalysts."

GSK was trading 1.4% higher at 1,501.1p by 1131 GMT, while AstraZeneca was down 1.1% at 10,672p.