The
biopharmaceutical
sector
is
expected
to
offer
a
safe
haven
from
macroeconomic
and
earnings
concerns
ahead
of
final
quarterly
results
from
companies,
according
to
Morgan
Stanley.
The
Wall
Street
bank
said
European
biopharma
stock
prices
should
be
supported
in
the
near
term,
owing
to
“undemanding
valuations
and
a
backdrop
of
challenging
macro
conditions
and
cyclical
earnings
risk.”
“We
continue
to
favour
European
large-cap
pharma
stocks
with
relative
earnings
growth
momentum
and
supportive
innovation
narratives,”
said
Morgan
Stanley
analysts
led
by
Mark
D
Purcell
in
a
note
to
clients
on
Jan.
16.
The
investment
bank’s
message
to
investors
comes
as
equity
analysts
sharply
reduce
their
estimates
before
next
week’s
European
earnings
season.
The
negative
sentiment
has
led
equity
strategists
at
Barclays
to
say
it’s
“hard
to
get
excited”
about
fourth-quarter
earnings
next
week.
At
the
same
time,
their
peers
at
Bank
of
America
have
forecast
a
15%
decline
in
the
pan-European
Stoxx
600
index
by
the
end
of
the
year.
Morgan
Stanley,
however,
cautioned
that
the
outlook
for
drug
pricing
reform
in
the
U.S.
poses
risks
for
the
sector.
But
it
said
that
in
the
near
term,
the
defensive
nature
of
pharma
stocks
will
give
them
an
edge.
The
bank
named
the
following
buy-rated
stocks
in
its
latest
research
note.
Shares
of
Indivior
,
argenx
,
AstraZeneca
,
Merck
,
Lonza,
Sweden’s
Sobi,
Novo
Nordisk
and
Sandoz
Group
were
among
those
listed
by
Morgan
Stanley
with
a
“buy”
rating.
All
stocks
are
also
traded
on
U.S.
stock
exchanges.
Indivior
The
bank
is
particularly
bullish
on
Indivior
,
a
specialty
pharmaceutical
company
focused
on
addiction
treatments,
with
a
price
target
implying
a
119.3%
upside.
The
analysts
cited
Sublocade,
a
monthly
injection
for
opioid
addiction,
reaching
$1.5
billion
in
sales
by
2027
as
their
base
case
scenario.
In
a
bull
case
where
Sublocade
hits
$2.2
billion
in
sales
by
2030,
Morgan
Stanley
sees
shares
rising
further
to
3,500
British
pence.
“We
see
Indivior
as
deeply
undervalued
considering
the
de-risked
growth
profile
and
the
margin
expansion
potential
resulting
in
strong
cash
generation
over
2024-2030,”
said
Morgan
Stanley
analyst
Thibault
Boutherin
in
a
separate
note
to
clients
on
Dec.
8.
AstraZeneca
AstraZeneca
is
Morgan
Stanley’s
top
large-cap
pick.
The
bank
sees
a
26%
upside
for
the
British
pharma
giant
and
singles
out
its
“smart
chemotherapy”
platform
targeting
cancer
stem
cells
as
a
key
driver
of
long-term
growth.
Novo
Nordisk
Shares
of
Novo
Nordisk
,
a
leader
in
diabetes
and
obesity
drugs,
offer
a
9.4%
upside,
according
to
Morgan
Stanley.
“We
believe
that
Novo
has
among
the
strongest
earnings
growth
momentum
across
the
EU
biopharma
majors,”
the
analysts
wrote,
citing
the
continued
expansion
of
the
anti-obesity
market,
which
makes
up
90%
of
Novo’s
growth
outlook.
—
CNBC’s
Michael
Bloom
contributed
reporting.
