HSBC overhauls European pharma ratings and flags AI rotation risk
HSBC Global Research cut its target price on AstraZeneca and changed ratings on GSK, Roche and Merck KGaA as part of a wider European pharma review, while flagging deal risk and mounting capital intensity pressures across the sector.
HSBC trimmed its target on AstraZenecato £165 from £172, keeping a “buy” rating. The stock closed at 14,456p on July 3, implying approximately 14.2% upside to target.
The broker said upcoming readouts for camizestrant (SERENA-4) and Dato-DXd (AVANZAR) were “key overhangs on the sentiment,” though it continued to see depth in the pipeline and balance sheet capacity for deals. HSBC cut AstraZeneca revenue estimates by 2.1% for 2026 and 2027.
GSK was upgraded to “hold” from “reduce,” with the target price lifted to £18.60 from £15. The stock closed at 2,015p on July 3, sitting approximately 7.7%.
HSBC said a management change and “recent willingness to reinvest in the pipeline” suggested the company “might be turning a corner,” though it noted the patent cliff remained unsolved. “The catalysts for de-rating of the stock are limited,” the broker said.
Roche Holding was cut to “hold” from “buy,” with the target price left unchanged at CHF365. The stock closed at CHF346.20 on July 3, implying approximately 5.4% upside.
HSBC said consensus estimates now better reflect pipeline revenue potential from giredestrant and fenebrutinib, eliminating the core of its previous bull case.
Merck KGaA was also cut to “hold” from “buy,” with the target lifted to €170 from €160. The stock closed at €145.65 on July 3, implying approximately 16.7% upside.
The broker said a recovery in Process Solutions had been partly pulled forward by supply-chain destocking and that “difficult comps and de-stocking” were likely to follow after the third quarter of 2026.
On the potential acquisition of Bio-Techne, HSBC said the valuation “seems rich” and could be “returns accretive in only the most bullish of scenarios.”
Sanofi kept its “buy” rating with a €95 target. At €75.81 as of July 3, the stock trades approximately 25.3% below target. HSBC said a Regeneron partnership deal combined with potential further M&A “could shift the narrative on the stock driving multiples normalisation.”
Bayer retained its “buy” rating and €60 target. The stock closed at €53.36 on July 3, implying roughly 12.4% upside, after jumping 8.90% on July 2 following a Supreme Court verdict in the company’s favour. HSBC said litigation liabilities were capped at $7.25 billion.
