Citi initiates coverage of European pharma stocks; AstraZeneca 'best in class'

Investing.com -- Citi launched broad coverage of major European pharmaceutical companies with a mixed outlook, issuing Buy ratings on AstraZeneca and Novartis while taking a more cautious stance on GSK, Novo Nordisk and Sanofi.

Analyst Graham Parry said valuations, pipeline depth and looming loss-of-exclusivity (LOE) events shape the bank’s relative preferences for 2026 and beyond.

Citi initiated GSK at Neutral with a 1,900p target, saying the company’s “growth, margins, dividend policy, balance sheet and pipeline have all improved,” helping drive a more than 45 percent share gain in 2025.

But Parry warned that the mid-term looks difficult, noting a “27-30E EPS CAGR 0%” as GSK faces “significant LOEs in 26E-31E,” particularly across its £7 billion HIV franchise. He said key launches and late-stage data “may not be enough to rerate the stock further.”

Novo Nordisk also received a Neutral rating with a DKK400 target. Citi cited a “tough 26E outlook” driven by U.S. pricing reform, obesity-drug reimbursement hurdles and rising competition.

Parry wrote that despite the scale of the obesity opportunity, “prices are eroding” and competitive pressures create uncertainty over long-term estimates.

For Sanofi, Citi initiated at Neutral with an EUR85 target, saying pipeline setbacks have “weakened the long-term growth outlook” and that 2026 is “catalyst-light.”

“Although Sanofi has time to reinforce its pipeline through both organic and inorganic means over the next 5 years, and its current c.10x 26E PE largely reflects the setbacks, we feel the market is unlikely reward the stock with a much higher multiple without tangible evidence of pipeline improvement,” wrote Parry.

By contrast, AstraZeneca was rated Buy with a 17,000p target. Citi called the company “best-in-class,” forecasting the fastest mid-term EPS growth in European pharma and highlighting a “by far the best R&D pipeline in the sector.”

“2026 sees a huge catalyst path with PIII readouts worth >$30bn in peak sales ($17bn risk-adjusted) and launch of c$6bn peak-potential baxdrostat in resistant/uncontrolled hypertension,” Parry highlighted.

Novartis also earned a Buy rating, with Parry pointing to “EPS outperformance,” a strong catalyst path and “valuation upside.”

“Although it has outperformed European pharma by 15% and the market (Stoxx600) by 5% in 2025 we see scope for this to continue,” Parry stated, adding thathe expects “Novartis to continue EPS outperformance.”

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