Shore Capital downgrades AstraZeneca as R&D spending dampens earnings trajectory

Core Viewpoint - Shore Capital downgraded AstraZeneca from 'buy' to 'hold' due to a less favorable earnings trajectory as the company increases R&D spending to prioritize revenue growth [2] Group 1: Earnings and Revenue - AstraZeneca delivered 16 positive clinical readouts in 2025, expected to generate over $10 billion in peak year revenues [3] - A further 20 readouts anticipated in 2026 are expected to carry similar revenue potential [3] - Near-term earnings progression is projected to slow to a 10% compound annual growth rate between 2025 and 2028 due to surging R&D investment [3] Group 2: Valuation and Market Performance - The current valuation of AstraZeneca is considered full at 20 times forecast 2026 earnings, despite confidence in exceeding the $80 billion revenue target for 2030 [2] - AstraZeneca shares have increased by 11% year-to-date, trading at 15,068p, which is up 1% on the last trading day [4] - Shore Capital believes the premium valuation is justified by the company's diversified growth story and strong pipeline, but sees limited scope for further rating expansion due to the imbalance between revenue acceleration and earnings progression [4]