Investing.com -- UBS made key adjustments to its ratings on major European pharmaceutical companies, downgrading Novartis (SIX:NOVN) while upgrading Roche and AstraZeneca (NASDAQ:AZN) in notes on Thursday.
The changes reflect UBS’s latest PharmaValues 2025 Strategic Conclusions report, which evaluates industry trends and company fundamentals.
UBS downgraded Novartis to Neutral from Buy, citing concerns over patent expirations and limited pipeline catalysts in 2025.
“We now see that this is broadly reflected in consensus expectations,” UBS stated, adding that upcoming expiries for Entresto, Tasigna, and Promacta in 2025 could slow earnings growth.
Novartis’s EBIT growth is expected to drop from "high teens" in the first half of 2025 to "low to mid-single digits" in the second half, UBS noted. The firm also lowered its price target for Novartis from CHF 111 to CHF 104.
Meanwhile, UBS upgraded Roche to Buy from Neutral, making it the firm’s “preferred Swiss Pharma Major.”
UBS pointed to strong growth from Vabysmo and Ocrevus, as well as the potential upside from Xolair in food allergies. UBS also highlighted a $16 billion revenue upside from late-stage pipeline assets, including trontinemab in Alzheimer’s and GYM329 in obesity. Roche’s price target was raised from CHF 300 to CHF 338.
Similarly, AstraZeneca received an upgrade to Buy, with UBS emphasizing its “sector-leading pipeline potential.”
UBS sees AstraZeneca’s diversified pipeline as a key driver, with seven major drug readouts expected in 2025. AstraZeneca’s price target was lifted from £115 to £142, reflecting improved revenue growth forecasts.