While the markdown of London and New York listed drugs firm AstraZeneca (NYSE:AZN) shares may well be knee-jerk and overdone, the warning from the more wily professional stock tippers is that now’s not the time to get involved.
Shares in New York shed over 15% and 16% in London.
The reason for the panic was the failure of the company’s lung cancer combination treatment on all measures in a final-stage clinical trial called MYSTIC.
There was a lot of hope and expectation factored into the share price ahead of the findings with AZ up 20% from January.
So in a sense, Thursday’s blood-letting is really just taking the company back to a more normal valuation.
The first broker to puts its head above the parapet this morning was mid-ranked London house Liberum, with a £49 a share ‘fair valuation’. That’s around £6, or 14% ahead of the group's current market worth.
It admits the MYSTIC result was “pretty much the worst case scenario”. This overshadowed the results for another phase III trial, for a drug called Tagrisso, which was a success.
Beware buying now...
The stock may be oversold on its analysis, but Liberum has these words of warning for bargain hunters.
“We would caution short term money that recovery is likely to be a long-drawn out process particularly until the detailed data from PACIFIC is reported later in the year,” it said.